Real Estate Short Sale-Options, Qualifications, and Benefits

I have had questions concerning real estate short sales. To offer an explanation of a short sale I thought I would go to an expert.

Andrew Bers is my guest blogger today. He is a broker/associate with Re/Max Alliance Group in Sarasota, Florida and you can reach him by calling 941-383-3741.

• What is a Short Sale and what are other options?

1. Short Sale: A negotiated settlement in which the lender agrees to receive proceeds less than the amount owed on the mortgage in exchange for the sale of the property to a third party…usually at no cost to the borrower.  A short sale is a win-win solution for lenders and borrowers and solves a number of issues. The borrower gets a fresh start while minimizing negative credit impact usually avoiding a deficiency judgment and minimizing their tax consequences.  The lender avoids the lengthy and costly foreclosure process plus subsequent property ownership and associated expense.
2. Foreclosure: Foreclosure will negatively affect the Borrower’s credit up for 7 years. Credit score will drop hundreds of points and it will be extremely difficult to borrow money, buy a house, car, open a new business or qualify for credit cards.  Further, the lender may file for a deficiency judgment seeking all of the monies owed on the debt, additionally there may be a significant tax consequence.
3. Deed in Lieu: Ownership of the property is voluntarily transferred from the borrower to the lender.  The lender may still pursue a deficiency judgment for the outstanding debt.  Typically the lender will require the borrower to try to complete a short sale so they do not have to take possession of the property and the ensuing liabilities and costs including: taxes, insurance, homeowner association fees, property maintenance and transaction fees upon sale.

• What should a borrower / homeowner do before listing the property as a short sale?

1. Consult with a team of real estate and tax professionals so the homeowner can obtain advice regarding their real estate, legal and tax options and consequences.
2. I have assembled a short sale team that will determine the viability of the sale, apprise the homeowner of their legal and tax consequence, determine if they qualify for a government sponsored short sale initiative, plus price and professionally market their property, negotiate the contract with the bank, review the bank approval letter, settle and complete the transaction.

• Is a short sale right for me?

1. Are your payments too high?
2. Do you own more than your house is worth?
3. Your mortgage will adjust soon and you can’t afford the increased rate?
4. You want to sell your house, but there’s not enough equity.
5. You want to minimize your debt.
6. You want lenders to stop calling.
7. You’ve experienced a loss of income.
8. You want to avoid foreclosure, move your property and move on with your life.
9. You want a fresh start!

• Should I be embarrassed about listing my home as a short sale?

1. If a borrower is experiencing “hardship” they are eligible to take advantage of a short sale.  If any of the following hardship issues exist it’s time to make a prudent business decision.  They include: Inability to work due to health issues, medical bills, separation or divorce, death of a spouse, job relocation, reduced income or unemployment, business failure or financial neglect.
2. Top 3 Reasons to Consider a Short Sale – Win / Win for All Parties

• Homeowner gets out of a financial predicament with a clean transaction and less impact on their credit score.
• The Lender avoids timely and costly foreclosure proceedings and the additional expense of owning and maintaining the property.
• Buyer wins by getting a desirable property at a competitive, current market value.

• I’ve lost the equity in my property…How much will a short sale cost me?

1. Professional fees are paid from the sale proceeds as part of the settlement at closing.  Depending on the particular situation the homeowner may incur fees if they choose to mount a separate foreclosure defense or develop tax / asset protection strategies.

• Where do I start and how do I pick the RIGHT agent.
  Contact me for a confidential consultation and property overview.  Many Realtors have limited experience and are new to the short sales process; a difficulty which is compounded by many lenders’ lack of sufficient and experienced staff to process short sales.  I have years of short sale experience in Sarasota and Manatee county, ranging from luxury to modest homes and condos.  In the world of short sales it is MOST important to pick a short sale expert not necessarily a Realtor who is familiar with your neighborhood.  Being a short sale expert is much more valuable to you than being a Realtor who markets your community.  I’ve earned all the significant Realtor short sale certifications and my team’s years of experience have involved hundreds of satisfactory settlements and millions in waived deficiencies.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.