Short Sales – The New Normal!


SHORT SALES: TOP 9 MYTHS DEBUNKED!

I have been doing short sales for 3 years.  All of my short sale listings have closed and the sellers have avoided foreclosure. But there is some confusion .. so here are some answers to clarify what you may or may not know about short sales.

Myth #1: The homeowner must fall behind on mortgage payments in order to qualify for a short sale.

Underwater - Short Sale

Drowning from House Debt? Let's talk!


Debunked:
Years ago this may have been true, but not in 2012.

  • A financial hardship must exist, such as the ARM (Adjustable Rate Mortgage) increasing in monthly payments.
  • Loss of job or income.
  • Health or medical issues.
  • Extraordinary loss in home value (which may be considered a hardship).

Note: Agents should not advise a homeowner to miss a mortgage payment.

Myth #2: Banks would rather foreclose on a property than approve a short sale.

Debunked:
Many still believe this myth to be true, but more accurately, banks would prefer not to foreclose on a property due to the $50-70k it may cost the bank per transaction. Banks lose less money on a short sale than on a foreclosure.

Note: In California, some lenders may pay owners as much as $25,000 to opt for a short sale.

Myth #3:
Homeowners must be pre-approved by their lender to be eligible for a short sale.

Debunked: Absolutely not true. By and large, most lenders will consider short sale offers. However, each lender may have unique and specific processes to follow, from listing the home to the acceptance of a short sale. Bypassing any part of this process may result the sale not closing, so be sure to follow each lenders’ processes closely.

Myth #4: Short sales never close.

Debunked: Obviously not true. In some areas of the U.S., nearly 50% of all closings are considered to be “distressed” properties, meaning REOs and short sales.

Myth #5: Short sales take months (and months) to close.

Debunked: The short sale processes must be learned. Once mastered, it may not be uncommon to close a short sale in 30 days.  However, certain idiosyncrasies may slow the process and each lender presents their own unique set of specific challenges. No two short sale transactions are identical.


Check out this link http://www.beachcitiesonline.com/shortsales.asp for more information about the Short Sale process.


Myth #6: Damage to the homeowner’s credit standing is comparable in a short sale and a foreclosure.

Debunked: In many cases, credit repercussions and deficiency protections are more damaging with a foreclosure. Short sale transactions can often lead to faster financial recovery for the homeowner and should be carefully considered.

Note: If the homeowner missed no mortgage payments, they may be eligible to finance the purchase of a home immediately following a short sale transaction.

Myth #7: Following a short sale, the homeowner will be ineligible to purchase another property for the next 5-7 years.

Debunked: Not true. Using conventional lending guidelines, some consumers may obtain a Fannie Mae backed mortgage a short 24 months after the close of their short sale.

Myth #8: After a short sale transaction, the homeowner will receive a 1099 and be forced to declare the loss as income.

Debunked: The owner may indeed receive a 1099, but due to the 2007 Mortgage Forgiveness Debt Relief Act, among other considerations, the homeowner may not owe any taxes on their transaction.*

Note: This Act is due to expire at the end of 2012.

Myth #9: The lender will sue the homeowner after the close of a short sale (or foreclosure, or deed in lieu of foreclosure) for the deficiency.

Debunked: California has certain anti-deficiency protections in place for short sales and foreclosures, depending on the circumstances.*

*As an agent, I cannot offer accounting, tax, or legal advice. Refer questions regarding these topics to appropriately trained professionals.

Any other questions?  I am taking appointments with homeowners to see if they are qualified to participate with a SHORT SALE.  Email me at Carol@CarolGilles.com or call me at 310-864-9738.

Sold Short Sale

Avoid Foreclosure! Ask me How!

 

About Carol

As a premier real estate agent in the South Bay, I’m here to provide you with all the resources and information you need to buy or sell real estate. I work with buyers and sellers in Torrance, Redondo Beach, Rancho Palos Verdes, Palos Verdes Estates, Long Beach and the surrounding areas and I’ve had extensive training in the latest real estate marketing strategies. I’m confident that I can offer you knowledge and tools most other agents can’t. Contact me so I can keep you updated on the latest real estate activities in our community and answer any questions you may have. I look forward to working with you!
This entry was posted in a-El Segundo, a-Hermosa Beach, a-Long Beach, a-Manhattan Beach, a-Redondo Beach, a-South Bay, a-Torrance, b-Distress Sales, b-Foreclosure, b-Short Sales, b-Upside Down. Bookmark the permalink.

Leave a Reply