WHAT IS A SHORT SALE?

“Short-pay,” “short sale”—what does that mean? You have probably heard these phrases used, and you may have heard them thrown in with other confusing buzz words like “REOs,” “foreclosures” and “bank-owned” properties. All these terms are being used liberally by news media, banks and the real estate professionals, but most homeowners are left wondering what they are talking about.

A short-pay or short sale is a situation where the current fair market value of the home is less than the outstanding loans and liens against the property. The homeowner or their real estate professional may be able to negotiate with the lender to reduce the payoff of the loan (short-payoff). In a typical situation, the lender agrees to accept less than the balance owing on the outstanding loan(s), and the lender agrees to pay the closing costs associated with the transaction, including real estate commissions. Generally the lender will not allow the seller to receive any proceeds from such a transaction. In some situations, the lender will require the seller to pay some of the seller’s own funds to close the transaction.

No two short sales are exactly alike! Some will have income tax implications. While a short sale may be just the answer to your situation, it is best to discuss it with a tax advisor and real estate professional experienced in handling short sales.

Contact us today and let us evaluate your specific circumstances. We will provide you with a free, confidential consultation. We want you to make an informed decision when it comes to your home.

Q & A – Credit After Short Sale, Foreclosure and Bankruptcy?

The California Association of Realtors (C.A.R.) has issued a comprehensive question and answer document regarding how your credit is affected by short sale, foreclosure or bankruptcy. If you are considering any of these options, this Q&A is a great starting place to answer some of your questions. Click here to read the full Q&A.

What is HAFA?

The National Association of Realtors has created this video to explain the newly enacted short sale program, called the Home Affordable Foreclosure Alternatives Program (HAFA).

AM I A CANDIDATE FOR SHORT SALE?

Here are a few guidelines to determine if a short sale might be the solution for you:

• First, do a little homework. You will need to determine the value of your property. We can assist you with this by providing a Comparative Market Analysis and giving you an estimate of the market value of your home.
• Determine the amount owed against the property. This is the total of all loans and liens including mortgage(s), unpaid property tax and delinquent homeowners association fees.
• You will also need to know what it will cost to sell your house. A title company, real estate attorney or real estate professional can provide you with the estimated closing costs.
• Do the math: Add the cost of selling to the total amount owed against the property (liens, taxes, dues); deduct that from the  current market value of the home, and if you come up with a negative figure of more than $10,000, short sale could be your answer.
• The next question is, has your financial situation changed for the worst since you purchased the home? The lender will want to know if you have a financial hardship such as the loss of a job, reduction of income, medical problems, death of a spouse, etc.
• Are you able to pay the shortage? Do you have savings, retirement funds, credit cards, etc.?
• If you have no equity in your home, and the negative figure you came up with is more than $10,000, you have experienced a financial hardship and you do not have the means to pay the shortage, then you are a short sale candidate.

Contact us today so we can provide you with the comparative market analysis and estimated closing costs.  Together we can determine if Short Sale is the answer for you.  If not, we will discuss your options.  Don’t wait,  protect your family’s future today!