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SHORT SALES
Do any of these scenarios sound like you?- Behind on payments?
- Facing Foreclosure?
- Owe more money than the property is worth?
- Going through a divorce?
- Have lost your job?
- Maxed out on credit cards?
- Being transferred with your job?
- Tenants not paying or moved out?
- Need major repairs on property and have no money to pay?
Our first objective is to find out if you qualify for a loan modification and can save your home. However, sometimes a loan modification does not make sense. That’s when a bank-approved short sale may be your best option.
What is a Short Sale?
A short sale occurs when a lender accepts less than full payoff on the mortgage(s) to allow transfer of a property to a new buyer. The lender agrees to discount the loan balance due to a financial hardship on the part of the homeowner. Typically all primary mortgages and junior liens can be negotiated. It is only available on properties in pre-foreclosure.
How Short Sales Benefit Homeowners
With a short sale, homeowners don’t pay for anything and they avoid a foreclosure on their credit report. Many times a lender will waive their right to a deficiency judgment as part of settlement. With a short sale, late charges, delinquent interest, penalties and attorney fees are reduced which minimizes the shortfall reflected on a 1099C. Homeowners can often avoid paying income tax on the shortfall when professionally advised. This allows sellers to get on with their lives!
Risks for Sellers
Although short sales are a great alternative to foreclosure, some risks are involved. Sometimes a lender may choose to either seek a deficiency judgment against the seller for the shortfall or send a 1099C for the shortfall, creating a tax liability for the seller. We advise you to consult a tax professional regarding any tax liability you may owe (see Internal Revenue Code Form 982 Sec 121).
However that being said, the tax liability is almost always significantly less than any deficiency judgment you may receive as a result of a foreclosure.
Why Would a Lender Consider a Short Sale?
Lenders are in the business of loaning money, not managing and selling real estate. Non-performing loans reduce what can be loaned by 2 to 8 times the amount of the bad debt. Lenders have Loss Mitigation Departments responsible for mitigating, or minimizing, losses from defaulted mortgage loans.
How can My Tampa Bay Properties, LLC help with my Short Sale?
In many cases we will purchase the property to either hold as an investment or immediately resell. This strategy can diminish the negative effects that a foreclosure can have on your credit score. Additionally, it can provide you with the advantage of negotiating with the lender, rather than having them impose their fees, charges and judgments against you. In many situations, all or much of this debt can be reduced or entirely eliminated.
Steps in a Short Sale
- A property requires a short sale to be negotiated with the bank in order for the property to sell. The homeowner or their realtor contacts us to initiate the process.
- We determine the likelihood of success based on the ability to negotiate a discount and the ability to resell the property.
- We confer with the sellers and listing agent to explain the process and coordinate required documents.
- We prepare, submit and negotiate the short sale package, driving the entire process for all lien holders.
- We prepare a repair estimate.
- We make an investor offer to start the process.
- We request the lender to postpone auction (if needed).
- We follow up on offer & trigger a BPO (Broker Price Opinion or appraisal of the property).
- Once an offer from an end buyer is accepted we will negotiate a small spread from the lender and sell it to the end buyer through the agents involved.
- The negotiated settlement will stipulate the lender is to pay all seller closing costs, including real estate commissions.
Contact Us today to see how we can help!