What is a Short-Sale?  The short-answer:  A situation in which a lender will except less than what is owed on the property as pay-off of the loan obligation.  Long-answer:  A complex process involving changing rules, a lender that can veto a transaction for any reason and a buyer that may not have the patience to wait while the lender makes up their mind.  This is not a do-it-yourself project. Why is there so much talk about short sales now?  Short sales have always been an option for sellers, but recent market conditions have eled to an increase in short sales and foreclosures.  Some of these market conditions are: Adjustable Rate Mortgages, Lending programs including low down payments, low credit scores, stated income loans, no documentation loans, etc. and less appreciation or depreciation in most markets compared to a few years ago. Why would a seller want a short sale?  Some of the reasons include:  The seller is overextended and cannot afford to own the property, foreclosure is a very public and sometimes embarrassing option, continuing to be late on mortgage payments or entering foreclosure can be very damaging to the seller's credit, the seller may be forced to move due to a job transfer or losing a job. Does every lender grant a short-sale?  No, each lender will examine and execute terms differently, some may grant a short-sale, some will modify the loan and some will proceed to foreclosure.  The potential problems are immense and that is one of the main reasons that you need a specialist assisting you with this process.   If I do a short sale, can I stay in my home?  Yes. A short sale is a real estate ales transaction and you may stay in your home during the process, even if you are missing your mortgage payments. What should you expect during the process?  #1 – Calculate the value of your property. This will be accomplished by preparing a CMA and looking at the competition that is in your area and the condition those homes are in.  We will need to price and position your home so that it sells quickly and at a high enough price that the lender will agree to the terms. #2 – Calculate your home’s financial position.  In this step we will examine the value from step 1 and compare this to the mortgages and other debt that is supported by the home value.  If your home value is significantly less than your debt tied to the property you are a candidate for a short-sale. #3 – We will start searching for a buyer, especially those that have expressed interest in buying short-sale properties.  Not every buyer will want your property given the status and tenuous nature of a short-sale.  The buyer must be willing to deal with extended deadlines and additional demands made by your lender.  Your lender is the key to a successful short-sale transaction and we will need them to feel confident in the new buyer.   #4 – We’ll need to contact your lender and explain your situation. Lenders are under no obligation to accept a short sale and the terms of the short-sale will be examined closely by the lender. The lender is the ultimate decision maker and will be the final approval for short-selling your home.  Lenders may disapprove of any aspect of the transaction without reason or justification.  Lenders do not have to be reasonable. #5 – There maybe tax repercussions in enacting a short-sale transaction.  Part of the process we will cover is the tax liability that may remain after the short-sale transaction is complete.  As with any tax related matter we will advise you to seek counsel from a tax professional or tax attorney. Can I get any proceeds from the sale? No funds will go to the seller in a short sale transaction. I have two loans.  Can I still do a short sale?  Yes.  Many homeowners have two or more mortgages on their property.  We can work with the lenders and can usually get both lenders to cooperate because neither lender will b benefit by having the property go through foreclosure. Is a hardship necessary?  Yes, whether it is financial or medical reason, the banks will not approve a short sale without one.  Examples of hardships are: - Separation or Divorce  - Medical Bills  - Inability to work due to health reasons  - Death of Spouse  - Job Relocation  - Reduced Income or Unemployment  - Business Failure Do I have to be behind on my payments to do a short sale? No. You can do a short sale without being late at all. What is deficiency and tax liability with regards to a short sale?  If a home is sold as part of a short sale, there will be a difference between the amount owed and what the lender collects.  This is called the short or the deficiency.  Sometimes this deficiency may be negotiable.  Some banks will seek a promissory note for the deficiency, meaning that the seller may be responsible to pay the difference between what the home sold for and what is owed to the lender.  Some lenders will reduce this amount on a promissory note.  Some lender might choose to file a collection or a judgment for the amount owed.  The seller should be certain that any amount of debt, or release from debt, is received in writing.  If the deficiency is forgiven, the lender can write off the shortage with the IRS, which means the seller may be responsible for paying taxes on the amount of the deficiency.  If the lender agrees to the short sale, the lender will issue you a 1099 for the short difference. The Mortgage Forgiveness Debt Relief Act of 2007 is an IRS code which addresses the tax consequences to a seller of a Short Sale.   Can I sell my home to a relative?  No. The lender will require a form entitled, an "Arms Length Transaction" which the buyer and seller will be required to endorse acknowledging that they are not related to each other.  Do I have to pay for the short sale?  We do not charge the homeowners for listing their home, marketing the property and negotiating the short sale.  Real estate commissions and closing costs are paid from the lender's gross proceeds from the sale of the home. How do I get started with a short sale?  It's easy.  Call or email us, and we'll be happy to answer any additional questions you have and get you started with the process.   There are no up-front fees to get you started.  Is using a Certified Short-Sale Professional (CSP) really necessary?  If you are in a sitution where you owne more than what your home is worth or if you need to sell but don't have the money for the difference at closing, you have to keep one thing in mind; it is a very difficult transaction process that can easily caue more harm than good if not performed propertly.  This is why your choice in real estate agents may be the single mos timportant factor determining whether thte process is successful or not due ot the coplexities and sheer volume of issues that arise.  This is snot a task to be undertaken by just any real esate agent.  As Certified Short Sale Profesionals, we have been trained to navigate through the requirements that need to be met to get all parties to agree to the short sale . Finding a buyer is only half the battle.  Once we have an able and willing buyer we must convince the lender(s) that they shoudl grant you a short sale.   Understand that there are hundreds if not thousands of requests for short-sales.  If a lender sees a well presented and thorough package compared to a package that will need much time and attention, which do you think will get the preferential treatment?   As Certified Short Sale Professionals we can handle the challenge of short selling your property and prevent you from succumbing to the many pitfalls that can beset those who are not familiar with the process.  Why Choose Our Team?  The world of real estate is ever changing and never seems to remain constant for more than a brief period.  Just a few years ago few agents or homeowners even knew what a short-sale was.  Today the real estate landscape has changed dramatically and the time has come to bring in the certified professional. A key element in the selling of a property short is knowing who makes the ultimate decision and making sure your proposal will take the least amount of time to process.  With the market conditions in some areas causing a flood of short-sale properties having an experienced and well trained guide will make the process much smoother. The reason you should choose a Certified Short-Sale Professional is similar to the reason you would select a brain surgeon over a family practitioner to perform brain surgery.  This very complex balancing act of selling your home in a short-sale position is so far away from what the normal real estate agent has experienced.  The risk involved of not completing a short-sale transaction properly is much worse than a situation that an agent is used to … in a normal transaction if the deal does not close the consumer loses mostly just time … in a short-sale if the deal does not close properly you can be foreclosed upon.  With this said a CSP designated agent has two goals: 1) Work with your lender to assist you in resolving the imbalance between home value and mortgage debt and 2) Sell your home quickly and as painless as possible. CSP real estate professionals are expert facilitators of the short-sale transaction – from beginning to end.  Those agents that have earned the CSP Designation recognize the impact that a short-sale can have on the sale of a home and have been prepared to provide that value added service for their clients.  Who better to work through the issues of short-selling your home than the one that is assuming responsibility for the marketing of your home?  Equipped with the knowledge and skills to ensure that your home is fully prepared to present a proposal to the lender, the CSP real estate professional will ensure you have an edge.