A “short sale” is when a house or other real property is sold for less than the amount of the loan or loans against it. For example, if you own a house that can be sold for $250,000 but you owe $300,000 on your mortgage, the house can only be sold in a “short sale”. Doing this requires the approval of the lender or other company that currently holds the loan. Foreclosures, auctions, and short sales have made up most of the sales in the real estate market in recent years.
Under the right conditions, all of the parties to a short sale may benefit. The seller benefits by being able to sell a house that could not be sold otherwise. The buyer often gets a below-market price for the house. The lender benefits by closing the books on a loan that may not be generating payments and income. They do this at a lower cost than is incurred by using the foreclosure process to take possession, then selling the house. This is why so many houses have been sold as short sales lately. However, the right conditions do not always exist and not all lenders will agree to a short sale.
Before committing to the short sale process, you should first consider other options. If you find that you have no better option and are willing to sell your home and move out, then you should consider doing a short sale.
Reasons to do a short sale -
- Save Your Credit. A short sale will not damage your credit as much as a foreclosure. You will be eligible to buy another house in as little as two years after a short sale.
- Debt relief. Gov. Jerry Brown has signed SB 458 (Corbett) into law on July 2011. This law says that the mortgage holder cannot sue you to collect the unpaid balance after an approved short sale in California. It does not matter if the loan was in first or second position.
- Debt forgiveness. Under the Mortgage Debt relief act of 2007, you can exclude the unpaid debt from your income tax return, paying no taxes on the discharged amount as long as it is a qualified principal residence.
- $3000 Relocation Incentive. You may qualify for a government program called HAFA that gives you a $3,000 allowance to help with moving expenses.
The disadvantages may be -
- There is no guarantee that the lender will approve the short sale.
- It generally takes 60-90 days or even longer, depending on the lender, to get a short sale approved.
- There is a LOT of documentation you need to sign and it includes a tremendous amount of personal and financial details.
- You must have a legitimate hardship that can be documented.
When you are going through a difficult time in your life, contemplating a short sale can be very daunting and you should not attempt this on your own. You need someone who has a lot of experience and knows the ins and outs of a short sale. You want an advocate who will put your needs first and is there for you through the whole process, eliminating your worry and stress..
We have years of experience getting short sales approved and helping homeowners get $3,000, and sometimes more, in relocation assistance. We have a history of success with short sales and in helping clients after the short sale. We will help you analyze which option is best for your situation. We set your best interests as our top priority, and we will do all of this free to you! All you need to do is call us at 800-692-1688 or email us with your questions.