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Given the harsh economic conditions, selling a house in Phoenix, AZ, can be extremely difficult and time consuming. If you want to sell house, it may take you as long as 28 months to get an offer accepted. Now what do you do if you happen to owe more than the house is worth or are trying to sell quickly in order to avoid foreclosure? Many people in this situation do nothing, and let the banks take the property back through the foreclosure process. However, homeowners have a better option that can help them avoid the legal problems, the negative tax consequences, and long-term credit damage experience by a bank foreclosure. This option is known as a short sale.
What is a short sale?
A ‘Short Sale’ is when the bank agrees to discount or ‘short’ the loan balance for a seller who owes more on their mortgage than the home is currently worth in exchange for a quick sale to a new buyer.
Goals of a Short Sale.
The goal of the short sale is to have the lender agree to accept less than the note is worth as satisfaction of the loan and release its lien on the property. This satisfaction of the loan means that the homeowner will not be sued by the lender for the deficiency of the loan. For instance, if the value of the note was $ 150,000 and sold at auction for $ 120,000, then the lender could sue the homeowner for the $ 30,000 deficiency.
When to use a short sale.
To qualify for a short sale, the homeowner must be behind a minimum of 2 mortgage payments and owe more on the property than its current value.
Risks of a Short Sale.
The lender may reject the short sale offer altogether and foreclose on the property. The lender may then sue the home owner for deficiencies. Also, the bank must report any debt forgiveness greater than $ 600 to the IRS, and since the homeowner is not paying that amount to the bank, the IRS considers the difference as taxable income.
Impact on Credit Score.
The impact of a short sale on one’s credit score ranges broadly from an 85-160 point drop. The higher the credit score is prior to the short sale process, the more it will drop. However, the homeowner may be able to improve their credit score quicker with a short sale than with a foreclosure, especially if they can prove that the house was the cause of the financial hardship.
Timeframe of the Short Sale Process
A homeowner cannot perform a short sale on his or her own house; therefore, the home owner should seek the services of a qualified real estate professional, such as a Realtor or Investor for assistance. These real estate professionals will prove to the lender that both the home owner and the property are in distress. The homeowner will need to sign a purchase contract and other paperwork relevant to the sale of the property and the real estate professional will then negotiate with the banks’ loss mitigation department. The short sales process can last anywhere from 3-12 months.
Finding a Short Sale Investor
To put yourself in the best position to avoid a foreclosure and have a successful short sale performed, you need to find a reputable investment group that is has experience in these types of transactions. It helps a great deal if the investment group is local, because the only way to know the true market value of your home is to have someone who already lives in the area. Also, they should be a member of the Better Business Bureau so you will be able to do research on them. Remember, if a short sale fails, you are the one who will have the negative consequences, so finding the best company is imperative.
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3 komentar:
Selling a home these days means that it has to be marketed through the internet. One of the most important in selling a home..is how it looks in photographs online and in brochures..if it looks good..then for you will find a buyer for your home..:-)
Sell My House Phoenix AZ
Very informative article about selling house.It is helpful too.My property in Thailand
Property Chiang Mai
I decided to sell my home for cash. I badly needed it.
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