The Short Sale Option

Avoiding Foreclosure

1. If you want to stay in your home, call the bank for a loan modification. There are government agencies that will help with this process.
2. If you want out, the short sale option is for you.

Pay No Commissions

In a short sale, your Realtor works directly with the bank to negotiate selling your home at market value. When you owe more than the value of your home, the bank takes “short” of what is owed. The bank also pays closing costs and commissions in most cases.

Banks are working with Realtors

Getting a Realtor involved early in the game is best! The banks are realizing that they are saving money in a short sale verses letting it go into foreclosure. They are putting processes in place for the short sale option. Call me and will we call your bank together to get the process started.

Short Sale vs. Foreclosure

Sellers in a short sale can buy a home again in two years compared to seven years with a foreclosure. Arizona is a non-recourse state, meaning that there may be protections for your other assets going forward. Most banks state “amount of debt settled for less than what is owed”. If you remain current on your payments, your credit points may not be affected.

Qualifying for a Short Sale

In most cases there needs to be some type of hardship to qualify for a short sale. Some banks do not require hardship. Hardship examples include loss of income, divorce, an increase in mortgage payments, or relocating and having to sell in a down market.

Wachovia Short Sales

Wachovia is a bank where I have direct access to the short sale negotiator. With Wachovia the process is much simpler and there does not have to be a true hardship. They are working with homeowners that are upside down and want out. We may be able get you out of your home in as little as 90 days or less with most Wachovia transactions!

Junior Liens

When there is a second lien on the home, the process of negotiating the short sale will take additional time. In a foreclosure, the junior lien holder gets nothing, so they are working with the first lien holder to get something!

2007 Debt Relief Act

The bank will issue a 1099C for the difference of the amount owed and the selling price. Sellers will need to report this on their taxes, but will NOT have to pay income tax. Click on the link below for more details:
http://www.irs.gov/individuals/article/0,,id=179414,00.html

Summary

Sellers who are struggling to make their payment, or that are behind in their payments, should consider the short sale option. Once an account is 90-days past due, most banks will start the foreclosure process. You do not need to fall behind in payments to negotiate a short sale. If, on the other hand, you are a buyer who is looking for a great deal, I have strategies that work for short sales, bank owned, estate sales and regular deals! Call right away to get started!