If you are having trouble making your mortgage payments or fear you may be facing foreclosure because of a financial or personal hardship, you are not alone, and a Short Sale may be an alternative for you.
A Short Sale occurs when the primary mortgage holder agrees to accept less than the amount owed on your mortgage, because the net proceeds from the sale of your property are “short” and do not cover your obligations including the total of all liens, costs of sale, mortgage payoff, property taxes, transfer taxes, and real estate commissions, etc. A homeowner cannot profit from the sale of their home in a Short Sale. Many lenders agree to accept a Short Sale because the foreclosure process is very expensive for lenders and they often feel it is in their best interest to approve a Short Sale.
We are highly trained and certified in the Short Sale process. As your Realtor, we will:
¨ act as your trusted advisor and negotiator
¨ aggressively market your home for sale
¨ assemble and submit your Short Sale documents to the lender
¨ act as liaison to the lender’s Loss Mitigation and Short Sale Departments
¨ work with you to ensure a successful Short Sale transaction
Selling your home as a Short Sale is similar to what you went through when you obtained a mortgage on your property when you purchased it. You probably met with a lender’s representative and had to provide lots of documentation that supported the fact that you could qualify for the mortgage. Now, we are doing it in the reverse.
When the lender or bank forecloses on a property and sells the property for less than what was owed, a deficiency exists with the loan. The deficiency is the difference between what the homeowner owed and the sale price of the property. So there may be tax consequences involved, and we suggest that you consult with an attorney or tax accountant for more information and a better understanding of the process.
There is a second issue as it relates to the deficiency and the infamous 1099. When you complete a Short Sale, the lender will report that loss to the IRS. If this is your primary residence, the IRS can no longer tax you on the deficiency thru 12/31/2017. It is, obviously, in your best interest to be proactive and consider a Short Sale now. At least there is a chance that you will realize a favorable outcome.
The big key here is to avoid foreclosure by all measures. A foreclosure is the most damaging event a credit status can encounter – worst than bankruptcy. In the course of getting your Short Sale approved, you may miss making your mortgage payments and these will appear on your credit report. However, you will recover much quicker from the credit dings if you keep your other accounts current. By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods, and such) relatively quickly within 1-to-2 years and be able to purchase another home within 3-to-4 years. With a foreclosure, it will take approximately 7-to-10 years to rebuild your credit standing.
If you would like more information about the Short Sale process, or if you feel it is a valid alternative for you, please call us at 301-717-7071 for a free, no-obligation, confidential consultation.