Short Sale - A sale of a "house in which the proceeds fall short of what the owner owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the remaining deficiency. In some cases, the lender may require the seller to pay a cash contribution or take on a note for a portion or all of the deficiency balance. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner may be able to pay off the loan for less than what he owes."
Common Short Sale Questions?
1. Will the bank pursue a deficiency? This is definitely the number one question. There are many government programs that allow for a waiving of the deficiency, like HAFA and FHA short sales; however, many short sales will not fall into these categories and this issue will be dealt with on a deal per deal basis. I have seen lenders waive the deficiency for many of my clients. Your agent needs to know when and how to ask for this. Sometimes lenders may require a promissory note or cash contribution in exchange for a full release of deficiency. The full release of the deficiency is always my primary goal for my clients.
2. What are the tax ramifications of pursuing a short sale? I advise all of my clients to consult with an accountant regarding taxes and short sales. Currently, if the property is your primary residence, you can avoid the tax liability. Also, your accountant can run an insolvency test to see if you can avoid taxes on the deficiency based on insolvency. Understand, the IRS considers forgiveness of debt as income. It is very important that you check with your accountant to verify that the short sale will not create a huge tax bill. Expect your lender to send you a 1099 for the forgiveness of debt.
3. Will my credit be affected? The answer to this question is yes. Your credit will be affected if there are late payments and when the short sale transaction takes place. However, a short sale may be better for your credit than a foreclosure and after you complete the short sale, you can begin to repair your credit.
4. Can I do a short sale if I do not have a real hardship? Yes, this is very possible. I have completed short sales for clients that were economically healthy. The bank may require more in terms of a cash contribution but this will be different with every situation. I am happy to take short sale listings from financially sound clients.
5. Can I stay in my house while working on a short sale? Absolutely! On the HAFA Government short sale program it is required that you stay in your home during the process. Staying in the home is encouraged by all.
The document below explains the benefits of a Short Sale versus a Foreclosure.
"Mainsail Realty Company/Clayton Bonjean is not associated with the government, and our service is not approved by the government or your lender." "Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit"
Destin Short Sale Agent | Foreclosure Help | Destin | Sandestin | Santa Rosa Beach | 30A
Clayton Bonjean Mainsail Realty Company Ph: 850-585-1284 - Fax: 800-398-6882
12870 Hwy 98 West
Miramar Beach, FL 32550
License # BK671253 www.mainsailrealtycompany.com
