About Short Sale and some commonly asked questions
If you think you own more than your home is worth and you are facing some type of hardship, our licensed Realtors and Short Sale Specialists are here to offer you “No Cost” Short Sale Assistance. We have helped many homeowners, just like you, avoid foreclosure and find financial freedom with a successful Short Sale.
10 Most Commonly Asked Short Sale Questions
What is a Short Sale?
A short sale is when a home owner owes more than their home is worth and the lender agrees to sell the home for market value. This type of transaction can be more time consuming then a traditional sale. However, a Short Sale if the best way for a homeowner to avoid foreclosure.
What is required to qualify for a Short Sale in California?
For a homeowner to qualify for a Short Sale they must prove to the lender that they have a hardship and unable to continue paying their mortgage payment. Example of Hardship: Loss of Job, Divorce, Relocation, Vacant Rental Property, Medical Expenses, Major repairs needed without resources to make them.
How late in the pre-foreclosure process can you start a Short Sale?
Depending on individual state law and regulations, a foreclosure can be postponed within 30 days of the sale date. Time is of the essence and you should allow a window of no more than 60 days to process and get an approval.
What documents are necessary to proceed with a Short Sale?
The documents need for the Short Sale process depend on your lender and what they require. Most lenders have their own Short Sale package that includes, but not limited to: Hardship Letter, Financial statement (form provided by lender), 2 most recent Pay Check Stubs, 2 months most recent Bank Statements & last 2 years of Tax Returns. Once an offer is accepted a copy of the fully executed Purchase Agreement and a HUD-1 settlement statement.
Will the Seller’s credit rating be affected if they allow a short sale on their property to occur?
While it is up to the lender to decide what to report, what often happens is the loan will report as “paid” on their credit report. The bad news is that there will likely be a reference that says “settled for less than originally owned” or something similar. It is certainly more advantageous to have the short sale referenced than to have a foreclosure on their credit report.
Will the bank or lender require an appraisal on the home in a short sale?
A Lender will require that a full appraisal be done in the short sale process for a true market value. Some may only require a BPO or brokers price opinion. The lender will need some formal assessment of the value of the home in order to make a decision as to accept or counter the short sale process. Typically the appraisal is only good for 90 days & a new appraisal will be ordered.
Are there tax implications in the Short Sale?
Much like the issue of credit reporting, the circumstances are individual to the lender. As a short sale represents a loss for the lender, they can report the amount lost a debt forgiveness to the seller. In many cases the lender waives the deficiency and is stated in the short sale letter of approval.
Why would a lender allow a Short Sale to Occur?
Quite simply, it may benefit all parties involved in the transaction. The Seller is relieved of the home they cannot afford. A costly foreclosure proceeding by the lender is avoided and the buyer purchases the home at an attractive price.
Will a lender allow the seller to make a profit on a short sale?
By the nature of a Short Sale transaction, the seller is not allowed to make a profit on a short sale. They may have extracted equity from a previous refinance of the home, but their current loan balance will be higher than the selling price of the home.
How long will the entire short sale process take?
It depends on the lender and their processing of paperwork. We have experienced less than 30 days and up to 90 from initially submitting the short sale package with the purchase agreement to the close of escrow.
The seller plays a huge part in a smooth short transaction. From time to time the lender will request more documents, during the short sale process. The documents must be submitted in a timely manner or the file will be rejected and the entire process will start over.
Remember – A Short sale should not cost the seller anything!
Don’t use an inexperienced agent that does not handle short sales on a regular basis and is not able to answer your questions at the time of the listing appointment. You should not be charged any additional money to have a short sale processed.
Contact me today to speak with your Short Sale Expert!
I can answer any questions you may have about the process. My team and I know how to get the Short Sale approved quickly, at no additional cost to you.
JoAnn Dickinson (909) 260-8228