SELLER with financial difficulties. Selling the property for less than what is owe on the mortgage. Financially distressed homeowner needs to sell the property before the lender seizes it in a foreclosure.
All of the proceeds of a short sale go to the lender. The lender then has two options—to forgive the remaining balance or to pursue a deficiency judgment that requires the former homeowner to pay the lender all or part of the difference. In some states, this difference in price must be forgiven.
How can we help?
Our specialties:
- Clearing up judgments or outside liens.
- Credit repair.
- Debt removal or renegotiation.
- Environmental or structural problems.
- Foreclosure avoidance.
- Houses in major disrepair.
- Selling your property without realtor commissions.
- Solving title issues.
- Relocation assistance.
How does this work?
A seller’s short sale package will consist of:
- A letter of authorization for your agent to speak with the bank.
- A preliminary closing statement.
- A completed financial statement or request for mortgage assistance (RMA).
- A hardship letter from the seller.
- Tax returns for the previous two years.
- W-2s for the previous two years.
- Payroll stubs for the last 30 days.
- Two months of bank statements.
- A comparative market analysis or list of recent comparable sales in the area.
Foreclosure vs Short Sale
A short sale or foreclosure are two possible outcomes for homeowners who are behind on their mortgage payments, own a home that is underwater, or both. In either case, the owner is forced to part with the home, but the timeline and consequences are different.
How a foreclosure works
In a foreclosure, the lender seizes the home after the borrower fails to make payments. Unlike a short sale, a foreclosure is initiated by the lender alone. Foreclosure is the last option for the lender.
In such cases, the lender repossesses the home, hoping to eventually make good on its investment in the mortgage. Unlike in most short sales, many foreclosures take place after the homeowner abandons the home. If the occupants are still in the home, they are evicted by the lender.
Once the lender has access to the home, it orders an appraisal and puts it up for sale.
Foreclosures normally take less time to complete because the lender wants to liquidate the asset quickly. Foreclosed homes may even be auctioned off at a public trustee sale.
Depending on the circumstances, homeowners who experience foreclosure have to wait for two to seven years to purchase another home. A foreclosure is kept on a person’s credit report for seven years.
How a short sale works
A distressed homeowner generally gets to stay in the home during the short sale process.
A homeowner who has gone through a short sale may, with certain restrictions, be eligible to purchase another home immediately.
While a foreclosure essentially lets you walk away from your home—albeit with grave consequences for your financial future, such as having to declare bankruptcy and destroying your credit. Completing a short sale is labor-intensive. However, the payoff for the extra work involved in a short sale may be worth it.
Important:
- If you are facing foreclosure, or have lost your home through foreclosure, you might still owe your mortgage lender money after the sale. This happens if the foreclosure sale price is less than the amount remaining on your mortgage - it’s called a “deficiency.”
- Deficiencies play a role in short sales too. In most states, you are on the hook for a deficiency after a short sale. But there are ways you can avoid or handle a deficiency.
- And for foreclosures, short sales, and deeds in lieu of foreclosure, you might owe the IRS some money if the lender forgives the deficiency
- Less drastic alternatives to a short sale include loan modification or the use of private mortgage insurance.
Why work with us?
Working with us means not only a smooth transaction, but it also could mean thousands upon thousands of dollars in savings as compared to selling a home through traditional means.
When you work with us, you can rest assured knowing that whatever situation you are in, we’ve got the solution. We take pride in our reputation for working one-on-one with each client to achieve a WIN-WIN situation.
Most homeowners have no idea what options are available to them beyond listing a house with a Realtor or trying to sell the house on their own and just hoping for the best. We know that we truly do provide unique alternatives. It doesn’t take long to see why you should work with the REAITeam before you’ll be ready to figure out how.
We provide many templates and forms. We simply need to fill out your information to complete the rest along with your signature.