Selling with a Short Sale
What is a Short Sale?
A real estate Short Sale is when a Lender agrees to sell the home at a price that is less then what is owed on the property. However, Sellers only have until December 31, 2012 to complete a short sale before the tax laws change. At such time the IRS tax rule will be imposed, whereby you will be taxed on the difference between what you owed the bank, and what you actually sold the property for. The current rule/exemption only applies to residential homeowners who actually live in their property, not investor owned properties; however, this exemption will expire on December 31, 2012. For more details, call our office, or speak with your CPA or tax attorney.
Short Sale Process
The short sale process can be very confusing because it is not as common as a regular real estate transaction. Typically the short sale process takes longer (3-4 months average) because the Seller’s title company or attorney has to deal directly with the bank and gain their approval to sell the home. When a client makes an offer to purchase a real estate short sale they do not have the benefit of getting a quick response like they would from a regular seller; however, the positive aspects of waiting for an approval from the lender certainly outweighs the negative.
The short sale process begins with the Seller having to show that they are eligible for a short sale. All lenders typically require 2 years of tax returns, 2 years of W2′s, most recent month of bank statements for all accounts and a hardship letter. The process of getting approved for a short sale is the exact opposite of what a borrower goes through when they are trying to obtain financing. When a borrower obtains financing they have to show that they can afford to make the mortgage payments. When a Seller is trying to get the bank to approve them for a short sale, they have to show the bank that they have made every attempt possible to try and make the payments. If a lender sees that they have other liquid assets, they will not be very likely to help a seller out and approve them for a short sale without expecting some additional form of compensation at closing
Embracing Short Sales
Nevertheless, short sales are fast becoming the preferred option for buyers wanting a “great deal”, and sellers who want to try to avoid the stigma of foreclosure and its long-lasting stain on their credit worthiness. At the same time, buyers perceive purchasing a short sale property as one of the best guarantees of a super deal; while banks have finally realized that they are likely to recoup more of their original investment by pursuing short sales instead of foreclosures. That being said, a short sale remains no less frustrating or time consuming for everyone involved in the process, unless you deal with professionals such as Perin Realty & Associates, LLC…..turning negative market forces into positive opportunities for our clients.
Let Bill Perin Assist You with a Short Sale!
Contact Perin Realty & Associates, LLC for a personal, confidential consultation to see if your property is eligible for a “Short Sale” , so please call TODAY – (941) 356-8947.