Short Sale FAQ
Short Sale FAQ (Frequently Asked Question)
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Q: I can’t make my house payments but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score…is a short sale right for me?
A: Probably, not. In cases where the seller can pay back all or part of the negative equity (usually to the 2nd lien holder) it makes sense for them to work out a repayment plan. The lender will then release the lien and allow the home to close.
Q: If I pay mortgage insurance and default on my loan, why wouldn’t that cover the deficiency amount?
A: The mortgage insurance is not there for your protection, just the mortgage lenders.
Q: Do I have to have my home ‘Approved’ by the lender prior to offering it for sale as a short sale?
A: No. Technically speaking there is no such thing as being ‘Short Sale Approved’. The actual approval only happens with an accepted offer.
Q: Do all short sales get approved?
A: NO! No one can guarantee that the lender will approve the short sale. There are lots of complex things involved in getting approval and you need an experienced agent who can handle this process smoothly. We can assure you that we will do everything to get the approval. Our success rate is way higher than the average agent in bay area in getting the approval.
Q: I owe more than my home is worth and I can’t make the payment, do I have to somehow qualify for a short sale?
A: The simple answer is NO. If someone can’t make their payment and they are otherwise insolvent they qualify for a short sale. Note: insolvent simply means their total debts are great than their assets.
Q: Do I have to pay income taxes…I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me…the seller…is this true?
A: It WAS true, now it’s not. According to the Mortgage Relief Act of 2007, you don’t have to pay taxes after short sale if it is your primary resident. The forgiven amount is limited to $2 million. I would recommend to consult your Tax Attorney or Qualified CPA before doing short sale.
Q: How do you, my listing agent get paid…who pays you commission?
A: The bank will pay the commission along with all the other usual closing costs. So, there is No fee from my clients for doing short sale.
Q: Do I have to miss a payment to do a Short Sale?
A: No. Late last year most major lenders started accepting short sale offers from sellers who have never missed a payment.
Q: I want to do a short sale and have a 2nd mortgage, does this make me ineligible?
A: No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holder
Q: How long does it take to do a short sale?
A: Short sale process can be a lengthy process, it has several stages which starts with gathering the documents from the owners, prepare the listing and marketing information, aggressively marketing to find a qualified buyer quickly, submit the short sale package to lender, assigning a negotiator for our file from the bank (this step takes more time and need an experienced agent to handle the negotiation with bank to get it approved fast with excellent negotiation skills. This itself takes somewhere 3-4 months depending on the lender and number of loans) and finally after getting approval, it takes somewhere 30 days to close the transaction.
Q: When should I begin the short sale process?
A: As soon as you think that you can no longer pay the mortgage or having difficulty in paying mortgage with your other expenses or you know you cannot afford in the coming months or you don’t want to go with any other option like loan modification then start the short sale process immediately by contacting an experienced short sale agent and better Certified short sale agent. Also consult with your CPA or attorney for any legal or tax related questions.
Q: Is there any charges for doing short sale?
A: We don’t charge anything for doing short sale from you. I know many real estate agents and attorneys charges upfront fees to seller to assist with short sale but we don’t charge anything upfront or at close escrow. Your cost to us will be zero! Even the commission is paid by lender – so it’s a free service to you from us!
Q: How do I begin a short sale?
A: Once you have decided that you want to go with this option, then call experienced short sale realtor and if you are in bay area then call me at 510-366-9405 to begin the short sale process. I have helped many families to avoid from foreclosure.
If you have any other questions regarding short sale or loan modification or deed-in-lieu, please feel free to contact me at 510-366-9405 or email me.
Your Bay Area Short Sale Specialist!
