Short Sales, sell your home for less than you owe on it and protect your credit

Learn How a Short Sale Can Protect Your Credit Rating and Relieve your Debt

Unfortunately, there are times when a homeowner may be forced due to their financial
circumstances to sell their home for less money than the mortgages debt to avoid their
mortgage being foreclosure. In this situation a bank may be prepared to accept less than
what is actually owed dependant upon certain conditions being met. If they are and the
debt is cleared then it is said to have been a Short Sale.

However, there are very strict requirements and some consequences that the homeowner
needs to be advised about to complete a “short sale”.

First – What exactly is a “Short Sale”?   Sometimes, the mortgage lender will agree to a
short sale of a home to minimize the lender’s loss on the loan should a foreclosure be
necessary. This process involves having a buyer willing to buy and pay less than the
amount of the mortgage remaining on the home. The seller of the home signs a listing
agreement with a real estate agent when the lender gives his approval for the Short Sale.
Then the agent finds a buyer who makes an offer which is less (sometimes considerably
less) than the mortgage carried on the home. When the seller accepts the offer and the
lender approves it, the sale can proceed.

The deal is closed whey the buyer delivers the funds, the lending company releases the lien,
and the seller turns over the deed. The buyer is happy. The lender can write off the loss on
company taxes – but the seller has some additional consequences.

Second - If you can meet the following circumstances, then you may qualify for a Short
Sale with your lenders agreement:

1. The market value of your home has dropped. Sales of similar properties must show that
the home is now worth less than the unpaid balance of the mortgage.

2. The mortgage must already be in default – that is, payments are not current.

3. The seller has experienced a life change which causes a substantial hardship and the
seller must write a letter to explain this hardship to the lender. Some examples include:
loss of employment, divorce, severe medical issues, bankruptcy and death.

4. The seller must have no tangible assets. The lender will want to review the seller’s tax
returns, financial statements (checking, saving, investment portfolio). Most lenders
would expect that all assets had been liquidated to pay the mortgage.

Then there are the consequences. Perhaps no buyer will be found, or the buyer’s offer is
not acceptable to the lender. If the sale goes through, the lender gets a tax break, but the
IRS will consider the amount of the original mortgage that the lender writes off as “income” to
the seller and thus may be taxable. Also a short sale will affect the seller’s credit report as a
pre-foreclosure that has been redeemed. Always get competent legal advice about the tax
liability and credit report issues. A real estate agent CANNOT give you financial advice.

WE CAN HELP YOU SELL YOUR HOME WITH A SHORT SALE.

CONTACT UP RIGHT NOW TO SEE HOW
Office - 770-844-0214
E-mail - Tony@PropsectsRealty.com