What is a Short Sale?
A short sale is the name for a real estate transaction that occurs when the outstanding loan or loans against a property are greater than the proceeds from the sale of a home.
How can you help me with a Short Sale?
We are a network of experienced and very reputable Real Estate Agents who specialize in California Short Sales. We help home owners, like you, by working with your lender to negotiate a lower payoff amount in order to price your home below the competition and get it sold, even in this market. Our agents aggressively market your home to attract buyers and they oversee the entire sales process of your home and negotiations with your lender from start to finish. This is all at absolutely no cost or out of pocket expense to you.
What are the qualifications for a short sale in California?
The main qualification is that you are in some type of financial hardship, that can include but is not limited to, a loss of employment or reduction in pay, death or illness in the family, relocation or job transfer, divorce, or even unexpected major home repairs that you simply can't afford.
If I sell my home short, will the bank come back after me for the money?
With us, ABSOLUTELY NOT. That's why owners do a short sale. Our agents will work to secure a full release for you at closing. Rarely will a lender ask that the homeowner take back an unsecured loan for all or part of the deficiency balance. Although it has happened, this is a rare occurrence, especially if you are in a true financial hardship.
What happens to all of the money that is forgiven by my lender?
Lenders will typically write off all of their losses on a loan. They will also send out a 1099 for the amount of their loss on the loan, which is commonly called the deficiency. In 2007, Congress passed the Mortgage Forgiveness Debt Relief Act. The Act states that in the event your primary residence is sold as a short sale and their is a loss, you will not be liable to pay taxes on any amount forgiven. Click Here to learn more information on the Mortgage Forgiveness Debt Relief Act. Always consult accountants and appropriate licensed persons in all tax related matters.
Why would my lender accept a short sale on a California home?
It's all about the money, since it's a fact that the average foreclosure proceeding costs a lender over $58,000. In addition, properties deteriorate in their condition and are subject to vandalism when vacant, ultimately costing them even more money. Banks are in the business of money lending, not property management. For them, it's simply a matter of being cost effective. It seems like a wise decision for them to cut their losses in order to avoid costly foreclosure proceeding since it can actually save them money over a foreclosure.
Who pays your commission?
The bank does. You will pay zero out of pocket in a California short sale. There's nothing up front to pay, and nothing required at closing, period. In a short sale, if you are in a true financial hardship, your lender pays all traditional sellers' closing costs. In addition, as part of the new Government HAFA program, you can even get $3,000 back for completing a short sale.
How much work does this take?
For you? Not much! We will ask you to gather certain financial information and forms, many of which are used to prove your hardship. From there, our agents will handle the negotiations and details with your bank directly, as well as the process involved in selling your house here in California.
If I am going through foreclosure, is a short sale even an option?
YES, it is. In fact, the bank will be more than happy to work with you on a short sale because, again, it saves them money in most cases to sell the house rather that to 'own it' themselves. It is to the bank's advantage, and yours, to work out a short sale. Typically a lender will immediately halt foreclosure proceedings to consider a short sale offer for a California property.
Why is it to my advantage to do a California short sale on my home?
A foreclosure will hurt your credit much more than a short sale will for several reasons. One, although some banks report a short sale, some do not. Short sales are typically reported as a "settled in full" or "paid as negotiated". Second, when you do a foreclosure or a "deed in lieu of foreclosure" it is typically five years to qualify for a loan again, where it is typically only two years with a short sale. Third, in the event of a foreclosure or deed in lieu of foreclosure, your lender can come after you for a judgment in the amount you owe in most cases. And fourth, through the HAFA Program you can receive $3,000 cash back for completing a short sale.
Until the short sale is completed, can I continue to live in my home?
Yes, you can. You will not have to move from your home until the closing. In fact, if you are facing a California foreclosure, and we are actively working with your bank, the foreclosure proceedings can typically be delayed. This makes it possible for you to stay in the home for some time so you have a chance to secure other living arrangements.
Can my current Realtor work on a short sale for me?
In most cases, the answer is NO. Many Real Estate Agents do not have the knowledge, experience, or skill it takes to complete a short sale on a house. It is a specialized skill and the truth is, the majority of other agents don't want to do it! There are many agents claiming to be "Distressed Property Experts" after taking a weekend training class. There is no substitute for experience. The results of inexperience can be disastrous. Because of our wealth of knowledge and unparalleled industry contacts, our short sale real estate agents make the deals happen, when other agents make foreclosures happen. Our average agent has closed over 50 short sale transactions.