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Riverside & Corona Real Estate
Short Sales - Can Doing One Help Me?Shorts sales are complicated. We hope to provide you information to help you understand more about short sales and if you should consider doing one or not. Having knowledge that will help you make decisions is important to Pedersen Real Estate. We can’t give you all the information you need here. This is just a summary. But as we state later in this article, before deciding to do a short sale, we urge you to consult with a tax accountant and/or attorney as there may be tax or financial implications. If you're having financial troubles and are having a hard time keeping up with your house payments because you've experienced a major financial setback such as a divorce or losing your job, or you need to sell for whatever reason but your house is worth less than you owe, you may be able to avoid foreclosure through a short sale. What is a short sale? A short sale is when a homewner in financial distress sells his or her property for less than the amount due. Your bank has to approve a short and all proceeds from the sale go to the bank. The seller cannot receive any funds in a short sale and a seller cannot sell to a family member. The lender sometimes gets a deficiency judgment against the homeowner requiring him to pay all or part of the difference between the sale price and the original value of the mortgage. Alternative to a Short Sale Before deciding upon a short sale, talk to your lender about the possibility of getting a loan modification. Don’t seriously look at doing a short sale without first doing everything you can to work with your bank on a loan modification. This option may allow you to stay in your home and get back on your feet. What to Expect If your bank won’t approve a loan modification, then a short sale may be a good choice for you. Be prepared for a lot of work and a long wait to complete a short sale. Understand that lenders are not required to do short sales but most lenders do approve short sales. They do not approval all short sales. Some short sale homes still end up going through foreclosure. The reason for your financial trouble should be a new situation for you such as unemployment or divorce. If the fact that you can’t afford your home anymore is due to something about your financial situation that you did not disclose when you originally applied for the loan, the lender will not be sympathetic to you. Moving Forward with a Short Sale If you think you may be a good candidate for a short sale, talk to your lender’s loss mitigation department. If the bank is willing to consider a short sale, it is time to find a good Realtor, one who is experienced with short sales. More imporatantly, you should consult an attorney, and/or tax professional. You may be thinking that there is no way you can afford to pay for these services at this time in your life, but you don’t want to find yourself in even bigger financial trouble. There may be financial and/or tax consequences that you should know about before deciding about moving forward with a short sale. What Information Will the Lender Need?
If you still have cash assets, the lender may expect you to use them to continue making mortgage payments or to make up some of the shortfall between the sales price and the mortgage amount. An attorney experienced in completing short sales can help you with this if you find yourself in this situation. Your lender may require that you sign a promissory note for a portion of the shortfall. Don’t Hold Your Breath Short sales almost always take longer than regular home sales. Sometimes buyers find another property while waiting for an answer from the bank. Be prepared - you could lose the buyer and have to start all over again. Also, you should know that a short sale will damage your credit but is generally less damaging to you than foreclosure. If you are reading this then you are probably experiencing financial trouble and we understand how difficult this is. Call us if you are thinking of doing a short sale. We are experienced short sale Realtors. Read about short sales in Riverside - click here. Return to the main page. Pedersen Real Estate
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