Understanding Short Sales for Sellers

You either want to sell your house because you would like to move or because there is a financial burden of trying to make the house payment. The problem here is that the house is worth less than what you can sell it for and also pay the expenses associated with selling it. You want the bank to forgive the difference of what you sell the house for and what is owed to them. This is a short sale possibility.

Justifying a Short Sale in the banks eyes

So why do I say this is a possible short sale? The bank will not just agree to do this without a reason. The bank will want what is called a hardship letter explaining your situation before they agree to do this. They will also want a breakdown of all your income and expenses.

Do I have other options?

If you can no longer make your payments but want to stay in the house, you can apply for a loan modification. A modification is usually for a set period of time (5 years as an example) and then refers back to the original terms with the extra added that you didn't pay in the last 5 years. But some modifications work differently, so it is important to find out what the terms are. If you get turned down on a loan modification because they can't come up with a payment that will work for you, it almost always means they will approve a short sale.

When should I contact you?

If you are behind on your payments or you know you will be in the next couple of months, please give me a call. If you need to sell your home and you are not sure on the value (especially if bought after 2001), the earlier you contact me the more options we have.

Other important items

Don't ignore letters from your bank or an attorney. There are time lines we have and missing these can greatly affect your options.

Short Sales don't move quickly. Be aware of that.

Not making payments and moving out of your house can expedite the process with the bank and make it tougher for you.

Short Sales will affect your credit, how much is debatable. Most people say 100-200 points and in most cases can be restored in 2-3 years.

Having your home go into Foreclosure will have both a stronger effect on your credit score and can effect you for 7-10 years.

In many cases the difference between what the bank agreed to sell for and what was owed to the bank is treated as income by the IRS

Unless the bank gives you a deficiency judgment on the short sale they have a right for a period of time to come after you for the difference.

Every bank is slightly different. I hope this gives you a good basic understanding.

Send Us Your Questions Regarding Short Sales.