Short Sale Questions & Answers

 

There is a lot of confusion out there, but hopefully addressing some of the main questions here will help provide some clarity on whether a  short sale is the best solution for your situation.

What is a short sale?
A: Simply put, a short sale is a Lender’s voluntary acceptance of less money than is owed and the release of liens or the Lender’s security interest so a property can be sold as an alternative to a foreclosure sale.

Is the Lender Required to do a Short Sale?
A: No.  A short sale is a voluntary agreement to do something that the Lender does not have to do.  No one has a right to a short sale and, therefore, the art and science of negotiation is critical to the success of a short sale.


What is the Lender Looking For?
A: We have a Checklist of items that we need for the borrower(s) to complete and sign and when we have everything on the Checklist, we have a “Complete Short Sale Package” to give to our negotiator to start the short sale journey with the Lender.  It’s not complicated and most Sellers can complete and sign the Short Sale Checklist agreements, documents and forms in a day or two.    

What is the Short Sale Checklist?
A: This checklist simply reminds everyone what we need to get to the Lender so negotiations can begin.  Our participating realtor or affiliate is there to review and explain what you need to do and what the documents say.  At the top of the checklist are the personal financial items that we need from the homeowner, such as a hardship letter, a completed financial worksheet and copies of pay stubs, bank statements, IRS returns, property tax bill, monthly loan statement(s) and the like.  The property information form is a sheet that the realtor will complete to give us and our negotiator a snap shot of the house problem, the value of the house and the amount that is owed to each lender.  And, the bottom of the checklist, we’ve provided a listing of the contract, agreements and disclosure documents that the Seller signs in the presence of a notary.

Do You Charge Any Fees Or Is There Any Cost To Me?
A: No.  You pay us no fees or hidden charges of any kind.  We make our money, when a lender agrees to a short sale discount that is fair and sufficient for us to buy and sell the property for a profit.  Our spread comes from the Lender who agrees to take the short or reduced payoff of the borrower’s debt.

Can I Make Any Money On the Short Sale?
A: The answer is simply: NO.  If a borrower receives any money from a short sale, the parties involved would be engaging in mortgage fraud.  And, we will never make any payments to the short selling homeowner.  What we will do, however, is to negotiate for a complete satisfaction of all of the borrower’s debts; and when we are successful, it will be like the homeowner won the lottery because in those cases the Lender has agreed that the reduced payoff completely satisfies the borrowers debt.  It’s like free money.  And, when it happens, it is a beautiful thing.

Are There tax Consequences For A Short Sale?
A: Generally, if a debt for which you are personally liable is canceled or forgiven, other than as a gift or a bequest, you must include the canceled amount in your income, and the lender who cancels the debt in a short sale reduced payoff should in most cases send a 1099-C.  However, you can exclude canceled debt from income if it is qualified principal residence indebtedness, up to a maximum exclusion of $2 million dollars.  If you are insolvent before the cancellation of debt, you would apply the insolvency exclusion.  So, in most situations, the sale of your primary residence as a short sale will not result in a tax consequence.  And, in most cases, possible tax consequences will be greater in a foreclosure.  In summary, a short sale and the cancellation of primary residence debt does not create a taxable event; there may be tax consequences, but tax consequences also can occur if you win the lottery, you earned income to pay your mortgage or your property goes to foreclosure.  Please note, the statements made here are not intended to be relied on as an analysis of your situation or as tax or legal advice.

Do You Buy Properties Where I live?
A: Yes, we are set up to buy short sale properties in all 50 states. 

Does My House Have to be in Bad Shape to do a Short Sale?
A: No. While we can buy houses in any condition, we mostly look to buy nice houses in nice neighborhoods where people with mid to high-end incomes want to live.

How Specifically Are You Helping Me?
A: You need a buyer for the house, just listing it will not stop a foreclosure sale of the house or do anything to get the Lender to agree to a Short Sale Approval.  The house is still marching toward foreclosure while sitting on the market. We are a buyer who can contract with you to buy it right now.  Secondly, we use a highly experience team of negotiators that can achieve a successful approval with your lender.  Having a contract right away, and employing a team of high-powered negotiators greatly reduces the processing time and also tremendously enhances the success rate!    

How Long Does the Short Sale Journey Take?
A: The length of time it takes to complete a short sale has almost everything to do with the lender or lenders involved.  We start the process with a Complete Short Sale Package.  The lender will typically order an appraisal of the property in a few weeks; and a short sale approval can be worked out in as short as about 60 days or the lender might be “back logged” and a decision could take 8 months.  This is why we refer to a short sale negotiation as a journey.

Does Listing My House With An Agent Stop Foreclosure?
A: No!  Negotiations and the bank’s focus on your house problem does not begin until our offer and complete short sale package is sent to the bank’s loss mitigator.  And, it is the approval of a reduced payoff that stops the foreclosure; Not the listing of the house.

I'm a Licensed Realtor With Short Sale Clients, Can We Work Together?
A: Absolutely!  All participating realtors get trained on how to use our forms and documents and we guarantee 6% commissions to realtors involved in our sale of the property, even though lenders typically will not pay as much.

I'm Convinced This is Right For Me , What Do I Do Next?
A: If you are a homeowner or Realtor looking to work with us, simply fill out the contact form by c below or on any other page on this site. You'll get a call back right away regarding how you can get started.  If you're a Realtor, go to our "Realtor" link and fill out the form so we can work out a great partnership.

Short Sale Process

The short sale process is the same in any state. The first step in the is the offer or contract. Without the short sale offer, your lender doesn't have a starting point and will not negotiate a price they will settle on. No waiting for a buyer. We put a contract on your house immediately and start negotiating with your lender immediately, saving months off the short sale process. Some lenders will respond quickly while others are understaffed and take months.
 

How to Short Sell My House

If you have zero equity in your house and you need to short sell it, we will buy it if it qualifies. You can short sell your house if you owe more than your house is worth and you have suffered a true hardship: loss of job, divorce, drowning in debt, no tenants, making two house payments, etc. Your lender may allow you to short sell your house instead of taking it back by foreclosure. We can put a contract on your house within 24 hours if your house qualifies. Short selling your house is simply where your lender accepts less than what you owe as the payoff balance. So, if you've faced a hardship and you know an eminent foreclosure is in your future, find out if you can short sell it today.