Why Short Sale?

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Why Short Sale? Anytime a home owner can no longer afford to make their house payments and the home’s value is less than what is owed, a short sale should be considered. All costs pertaining to the short sale including real estate agents commissions will be paid by your lender. A short sale has much less of a negative impact on your credit than foreclosure. How do I start the short sale process?

 

Foreclosure is not an option homeowners willingly allow to happen. In fact, most people will do just about anything – including working two or three jobs and renting out space in their home – in order to avoid it. Unfortunately, the unique situation of today’s housing market has prompted more unavoidable foreclosures than ever. These days, many people are underwater with their mortgage loans to the tune of tens of thousands or hundreds of thousands of dollars. For them, short selling their homes and downsizing is an option that should seriously be considered. Foreclosure is not a good option. By selling your house in a real estate short sale rather than going through foreclosure you will avoid eviction and your house will not be sold at a public sale or auction.

More and more homeowners realize that a short sale is also a smart financial decision. Having to pay a high mortgage on a well over market value property (no equity) as well as taxes and insurance is not recommended by any financial expert.  Homeowners in this situation are basically paying a very high rent to their lender. Short selling has become the most popular route out for underwater homeowners.

A real estate short sale can bring many benefits to a seller

Financial Incentives

There are no costs tothe seller when doing a short sale. Upon approval from your lender they will pay ALL FEES related to the short sale including short sale Realtor’s fees and possibly attorney fees if necessary.

Your lender may offer you relocation assistance of up to 3,000 in a short sale. They typically forgive the deficiency balance (the difference between the amount you owe and the amount you sell the property for). Working with a qualified and experienced short sale Realtor will ensure you walk away free and clear with the best possible outcome.

Even if you are unable to make your payments you can stay in the home until the short sale is completed. This will allow you time to evaluate your next move and hopefully save some money. In return you will need to cooperate by working closely with your short sale Realtor, keep the home in good condition and allow your Realtor to show the home to potential buyers when requested.

Click her to request FREE help from a qualified short sale Realtors in your area who can assist you with a short sale

Short Sale Avoids Foreclosure

The foreclosure process completely strips control away from a homeowner. As soon as the ball is rolling on a foreclosure, the borrower has very little say about what unfolds. Even if the foreclosure has been precipitated by serious and unsolvable financial woes, it’s only natural for a person to feel guilty and irresponsible for it. A real estate short sale is a much more proactive course of action, allowing a borrower to take the reins in many ways. Better still, a short sale allows a homeowner to avoid the guilt and stigma of a foreclosure.

Reducing Tax Liability

Taxable cancellation of debt income from a short sale: Homeowners must act quickly! The Mortgage Forgiveness Debt Relief Act (http://www.irs.gov/newsroom/article/0,,id=205004,00.html) approved by Congress is scheduled to expire at the end of 2012. The law eliminates any federal taxes on mortgage debt that lenders cancel or forgive up to $2-million, and currently applies to debt forgiven from 2007 through 2012.  The program could be extended by Congressional mandate, but many housing analysts feel the act, passed at the height of the financial crisis won’t be extended. Homeowners must act now.

In a foreclosure, the amount of “cancelled debt” is generally taxable unless an exemption applies.

Softening the Credit Rating Blow

There is life after doing a short sale. Although a real estate short sale may have a slight negative effect on your credit, by completing this transaction, you will qualify for future credit sooner than if you allow your home to go through the foreclosure process.

A foreclosure can stay on your credit report for up to ten years, and it can lower your credit score as much as 250 to 300 points.  When doing a short sale on your home, the only thing that will show are late payments during that period, but the zero balance on credit could show that your home loan was “paid as agreed”.  Even if your credit report states that the balance was “settled” on your mortgage, it may drop your score by 50 points, but this is better than a foreclosure credit hit.  This may show on your credit report anywhere between 12 months to 18 months.

Homeowners who lose their primary home in a foreclosure won’t be eligible for another Fannie Mae loan for five years.  Homeowners who successfully negotiate a short sale will typically be eligible in two years for a loan backed by Fannie Mae.

If an investor’s property goes through strategic default or foreclosure than the period of waiting is 7 years.  With a successful short sale negotiation you could be eligible within two years.

It is clear negotiating a short sale is a smarter financial benefit to the homeowner and their family rather than walking away and letting the home go into foreclosure.

How do I start the short sale process?

Reducing or eliminating the Amount of Money Owed After Sale

Homeowners facing foreclosure quickly come to the realization that their lender(s) are not looking out for their best interest.  A short sale Realtor’s job is to negotiate the best possible outcome taking away stress from the homeowner and making the short sale process as smooth as possible. They are highly successful in negotiating with the lender to accept payment in full without pursuit of any deficiency judgement allowing the homeowner to walk away free and clear. The amount that will be owed after a short sale will typically be zero. Instead of owing tens of thousands of dollars, the borrower will be forgiven for the deficiency balance altogether in return for participating with a short sale. In some situations, the seller may have liquid-able assets and only be responsible for a fraction of the amount. It depends on the financial situation of the seller and terms of agreement with lender.

Short Sales Are Viable Alternatives to Foreclosures

Whether it’s through a short sale or a foreclosure, losing a house can be a very unsettling and upsetting experience. Still, the blow can be significantly softened by going the short sale route. When the pros and cons of each method are weighed, short sales always come out on top. Sellers who are serious about wanting to go the short sale route should do their research so that they get approved for this attractive alternative to foreclosure.

Do I Qualify?
How Does A Short Sale Work?
How Can I Find A Qualified Short Sale Realtor?
Short Sale or Foreclosure?
When Is It Too Late To Short Sale?