Short Sales
We Can Help You Avoid Foreclosure
We are not foreclosure consultants. Our expertise comes into play if and when a homeowner concludes that there is no realistic way to stop the foreclosure process. In fact, THERE IS A WAY to avoid foreclosure and that is by doing what is called a short sale.
Why a Short Sale Can Be a Great Option
When the lender accepts a short sale, the homeowners avoid getting a foreclosure mark against their credit which is very important in repairing one’s future credit. Having a foreclosure on your credit is worse than a bankruptcy. It can take as little as one year after a bankruptcy to be eligible to purchase another home, whereas it takes as many as three to five years after a foreclosure.
The Possibility of Staying in the Home
After the conclusion of the short sale, some homeowners desire either to rent or to lease/option the property back from us. This can work if the homeowner has adequate monthly income and can do the necessary credit repair to qualify with a lender to buy the property back from us within two years.
What is a Short Sale?
When a lender agrees to a short sale, it means that they agree to take less than the total amount owed on the mortgage and fees incurred. Most lenders are willing to consider a short sale in order to limit their expenses. They realize that in a foreclosure auction, a buyer has to come up with ALL CASH at the time of the sale, so the pool of buyers is very small and at many times, nonexistent.
Our First Priority is to Help Homeowners Avoid Foreclosure
To do this we work hard at getting your lender's attention, submitting what amounts to nearly 80 pages of documents (don't worry, we'll do most of the paperwork) and negotiating the sale. Our hope is to buy the property with enough margin to make a profit after the subsequent costs of fix-up, holding cost, and resale.
What Do We Need to Begin the Short Sale Process?
We (or our Realtor) will do all the negotiations with your lender or lenders. To get the short sale underway, the lender will require the following items which we can help you with.
- Signed Loan Authorization Form which allows us to talk to your lenders about your loan.
- Most Recent Loan Statement from Each Lien Holder which gives us all the needed information.
- Completed Financial Worksheet which acts as a summary of your budget.
- Last 2 Years Tax Returns. In particular, the first two pages of each return
- Last 2 Months Pay Stubs
- Last 2 Months Bank Statements if you have a bank account.
- Financial Hardship Letter. This is a one page handwritten summary of why you are behind on the loan and why you need this need the short sale alternative.
Two Issues to be Aware Of
Once the short sale is complete, the lender may pursue a deficiency judgment for the unpaid balance. We seek, however, to get lenders to waive this right and many are willing to do so.
Additionally, after the short sale, a lender will issue a 1099 because the IRS considers forgiven debt as income. Most people in this circumstance, however, can file IRS form 982. If they are insolvent after the short sale, they will not have to pay taxes on the forgiven debt. Please obtain legal advice for how these matters may apply or not apply in your situation.
Our First Priority is to Help Homeowners Avoid Foreclosure
To do this we work hard at getting your lender's attention, submitting what amounts to nearly 80 pages of documents (don't worry, we'll do most of the paperwork) and negotiating the sale. Our hope is to buy the property with enough margin to make a profit after the subsequent costs of fix-up, holding cost, and resale.