The Basics: Short Sales Due to current economic conditions, the number of short sale properties on the market is rising. The increasing number of short sales on the market presents challenges for REALTORS®. Below you'll find more information on: short sales and their challenges, the government's efforts to address these challenges, and tools to help you navigate the short sale process.
What is a short sale? A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt. Why is the number of short sales rising? Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses. A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially. HOW DO I QUALIFY FOR A SHORT SALE? - Unemployment or work hours cut
- Divorce or legally separated
- Medical emergency / sudden illness
- Bankruptcy
- Death
- Your House Market Value Has Dropped.
- Your Mortgage is in or Near Default Status.
- You've Fallen on Hard Times.
WHAT HAPPENS WITH THE DIFFERENCE?
Depending on if the house was your primary home or an investment, you may not need to pay taxes on the difference. Learn more about this law that was passed: Mortgage Forgiveness Debt Relief Act of 2007. Please consult a Real Estate Attorney and/ or a Tax Accountant for advice. If you are having difficulty meeting your house payment and foresee foreclosure, there are several different options you may have. For most homeowners, this is a very sensitive situation and speaking to someone working in the industry can help resolve these issues. Contact me via e- mail or phone for a free on obligation consultation to discuss how we may be able to serve you. |