 | Frequently Asked Questions |
- What is a Short Sale?
A short sale is when you sell your home for less than what you owe on it and your lender(s) give a special approval to sell your home at a reduced price.
- Am I still responsible for closing costs, commissions, etc. if I short sale my home?
Surprisingly no. All commissions, title fees, closing costs are paid by your lenders. Remember most lenders would rather pay these minimal costs than foreclose on your home, pay attorney's fees and the expense of maintaining your property until they can sell it.
- How do I know a short sale is my best option?
Typically a short sale will end up costing your lender less money than if they foreclosure on your home. Unless you have equity in your home to refinance, can afford to pay a cash difference at closing or would rather let your home go back to the bank, a short sale is the best option for you. Everyones situation is different so please submit your information in the "Contact Us" area and we can schedule a phone call or meeting to discuss the specifics of why you are considering a short sale.
- Do all lenders approve short sales?
The biggest downfall of short sales is that not all of them close. The national average is only 23%! That is why its so extremely important to make sure you hire a professional who is experienced not only in real estate but high volume short sale transactions. Our team has closed 87.5% of all short sales we have listed in the past 12 months.
- How do I know if I qualify for a short sale?
Typically homeowners sell their home as a short sale due to a financial hardship. Unfortunately, unless you can prove to your lender a hardship is evident you will not be able to short sale your home. Hardships include but are not limited to: Illness or injury, job loss, forced relocation, divorce or unforseen adjustment in living expenses. If you're not sure if you qualify feel free to call Travis John at 407-617-2618 and he will be happy to qualify you. All this takes is a moment of time and there is no cost to you.
- What if I have multiple loans?
There are a lot of people who have multiple loans on their homes. We will work with both your lenders to get them to cooperate and settle your liens.
- I'm not deliquent on my payments can I still short sale?
There are some lenders who are allowing to short sale before you become late on your payments. Unfortunately most of them require for you to be late in order to consider you a candidate. The best way to find out is to speak with your lender before to see what their requirements are.
- How does this affect my credit?
Remember the purpose of a short sale is to avoid a foreclosure. A foreclosure on your credit report will make a severely negative impact, not to mention it will stay on your credit report for at least 7 years. A short sale does affect your credit negatively but typically only for about 2 years (many have had their credit repaired in only a few months). There are now a few lenders offering home loans to Buyers right after doing a short sale.
- What percentage of Short Sale Listings do you successfully close?
We are proud to have closed 87.5% of our short sales over the past 12 months. The national average is only 23%!
- What about the other 12.5%?
The other 12.5% is generally made up of customers who have received loan modifications, chosen to file for bankruptcy, opted to do a deed in lieu or ran out of time to short sale their property.
- What is the motivation for the banks to do a Short Sale?
There are several reasons a Bank will prefer a short sale over a foreclosure. The most obvious is that the bank's lose an average of 57% on a foreclosure property where short sale's have an average loss of 36%.
- Will I get a big Tax Bill by doing a short sale?
This is question we get all the time. We are not Accountants and recommend to all of our clients to get advice from one prior to doing a short sale. However, if you are selling your primary residence as a short sale there has been federal legislation implemented to protect homeowners doing a short sale. It is called "The Mortgage Forgiveness Debt Relief Act 0f 2007". This law went into effect to essentially make short sales possible for sellers that are selling a "primary residence" and protect them against the negative financial implications or tax consequences of doing a short sale. Again this is good news but I urge you to get specific advice from a certified public accountant prior to doing a short sale. Read more on the IRS website: http://www.irs.gov/individuals/article/0,,id=179414,00.html
- What if I have 2 Loans?
Short Selling a home with multiple loans is NOT impossible. It is more work to have to negotiate payoffs between more than one lender but we have successfully closed deals in the past with two or more lenders.
- Should I stop paying my mortgage?
It is your decision whether or not to choose to stop making payments on your home. Most of our clients do not even have a choice. MOST lenders require you be late on your payments in order to short sale but some do not. It is in your best idea to call your lender(s) and ask them what their requirements are before we start the short sale process on your home.
- Do I have PMI (Private Mortgage Insurance)?
If you did not put at least 20% down or more on your property when you purchased it there is a very high change you have PMI on your property.
- Can they say no?
Yes. Although it does not happen very often there are times when lenders might not agree to short sale your home. The only way to find out the terms they are willing to accept is to try to go through the process.
- Can my family member buy my short sale?
Yes. Your family member can buy your short sale HOWEVER there are some lenders that require you to sign an Arm's Length Transaction Agreement which prohibits you to do so.
- Why don't I just foreclose?
It's easy to want to just give up when you're doing a short sale. It can be a very stressful process. Why foreclose on your home when you have the chance to sell it? Many people who foreclosure on their homes are sued by their lenders for the entire deficiency of their mortgage. At that point most people even file for bankruptcy. This can be detrimental to your credit for 7-10 years or more!
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Travis John P.A., and his team of experts know the importance of staying up-to-date with current industry designations and certifications. That is why we are Certified Distressed
Property Experts (CDPE)
& hold the Short Sale
Foreclosure Resource (SFR) Designations.
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