|Who Pays For A Short Sale?
A short sale is when a seller sells their home for less than what is owned on their mortgage(s). To avoid
foreclosure, a lender will agree to a short sale by letting a new buyer purchase the home for less than the mortgage
balance while the home is in a pre-foreclosure status.
Here are some steps to do a short sale:
* Seller signs a listing agreement with a real estate listing agent subject to a short sale with 3rd party approval
* The agent finds a buyer who makes an offer for less than what is owed on the mortgage
* The seller accepts the purchase offer
* The seller ’s lender(s) accept the buyer’s purchase offer
* Transaction closes when the buyer can deliver the funds and then the lender releases the lien and the seller goes
ahead and delivers the deed.
If the above happened as smoothly as it sounds, then it would be an easy transaction. Well, it's usually not that
You need to qualify to do a short sale by meeting the below requirements:
1. The Home’s Market Value Has Decreased – Comparable sales will tell the lender(s) that the home is worth
less than the unpaid balance.
2. The Mortgage is in or Close to Default Status – Lenders typically didn't consider a short sale if the
payments were current but now it is different. Many lenders now want to avoid future problems.
3. The Seller Has Entered into Hard Times – The seller must submit a hardship letter truthfully telling the lender
why they cannot pay the difference upon sale and why they have stopped or will stop making payments on the
mortgage. These are not considered hardships: Bad purchase decisions, unhappy with neighbors, buying another
home, pregnancy, moving into an apartment. Hardships are instead: unemployment, divorce, bankruptcy, death,
4. Seller Has Few Assets – The lender will want to see a copy of the seller’s tax returns. If the lender sees
substantial assets, the lender may not grant a short sale as they will feel that they have some money to pay the
shorted difference. Sellers with some assets may get a short sale but may need to pay back the shorted difference.
Consequences of a Short Sale:
A short sale is dependent on the seller and their Realtor finding a buyer that is qualified. If the mortgage bank
rejects the offer, then the short sale may not take place.
Short Sale Tax Consequences: Check with your tax accountant to see if you qualify for IRS Debt Forgiveness.
Blemished Credit Report: A short sale will show up on your credit score and will have some negative effect on
scoring and future borrowing, but usually not as much as a foreclosure. Arias Law LLC cannot advise you on
how exactly your credit score will be affected by a short sale.
|If our Short Sales Specialists successfully negotiate a
short sale approval, with the Seller's mortgage bank, there
will be no cost to the Seller.
No legal professional can guarantee an approval. Every
mortgage borrower's circumstances are different. We will
gladly talk to you about the advantages of a short sale in
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