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Short Sale, Avoiding Foreclosure At Orlando Home Store we understand the stress financial hardship can place on a family brought on by various reasons like health, unemployment, loan resets and out of area job transfers naming just a few. If you are facing foreclosure contact us to see why a short sale is the better option, we will educate you on the process and promise to be very discreet and handle your short sale as quickly as possible. Below are some of the most common questions that we have encountered related to short sales. |
Frequently Asked Questions:
Q. What is a short sale?
A. A short sale is simply put, a negotiated settlement or a reduced payoff of the loan attached to the property that is worth less than what is owed. All we are doing in a short sale situation is helping the homeowner negotiate a lower payoff so that we can close the transaction without the homeowner having to come to closing with money.
Q. What is the short sale process?
A. Although there are multiple steps throughout the short sale the basics are as follows:
First, the bank requires the home to be listed through a Real Estate Agent and placed on the MLS exposing the home to buyers; this is also a must with the HARA & HAFA government programs.
Second, is to quickly start collecting information needed for the short sale package from the seller, this includes loan numbers, date of last payment, hoa payment information and management company information, signed third party authorization form, financial documentation and hardship letter from the homeowner.
Third, we compile and create the short sale packsge that contains the above information along other documentation required by the bank such as the listing contract, MLS listing information, HUD showing all cost associated with the closing and more and send it to the bank along with an offer (if one has been submitted).
Fourth, after the bank has received an offer to purchase they will order an appraisal or BPO performed by an outside source, the bank will either accept the offer or counter the offer.
Lastly is the closing.
Q. Can I still short sale if I received a foreclosure notice?
A. YES! Orlando Home Store Agents have stopped many foreclosures within days of the foreclosure judgement taking place, and once it was within hours.
Q. How long does a short sale take?
A. A short sale negotiation process can be anywhere from three months to six months. It is very important that the homeowner be patient during this long process.
News Flash, some banks are becoming more aggressive with short sales, we're seeing a shorter timeframe from contract to purchase to closing on the property.
Q. Do I need to hire a Real Estate Agent to short sale?
A. Hiring a Real Estate Agent who is experienced in short sales will likely ensure the job gets done. Often short sales end up as foreclosures due to lack of experience.
Q. How does my Real Estate Agent get paid in a short sale?
A. Typically the bank that approves the short sale includes and pays all selling cost associated with the sale including the Real Estate Agents commission.
Q. Has Orlando Home Store ever had a short sale that was not approved?
A. We currently have a 92.5% success rate on closing all our short sales! In order to maintain this success rate our Agents walk you through a short sale preapproval process. Call 407-330-0060 or just fill out the information below, we promise to be discrete with any information you disclose.
Q. Can the homeowner stay in the house?
A. The homeowner owns the home until the auction, so they can stay in the home; however the purpose of a short sale is to get the property sold. We find that it is easier to sell the house if it is vacant, so the homeowner should make plans to move out as soon as possible. If the homeowner needs to stay in the property as it is marketed for sale we ask they keep it clean and tidy, make it available for showings with notice. We also ask the homeowner to leave if possible for the showings just make sure you have no valuables lying around.
Q. Do you charge any fees for a short sale?
A. No, we do not charge any fees to negotiate a short sale with the bank, companies that charge fees can slow down the process of the short sale. We are compensated by representing you as your real estate broker in the sale of your home.
Q. If my home needs repairs can I still short sale?
A. Yes, any properties no matter the condition can short sale.
Q. If I have two or more mortgages can I still short sale?
A. Yes, each mortgage will need to be negotiated individually.
Q. Who pays back property taxes or HOA fees in a short sale?
A. Typically the bank that approves the short sale includes all closing cost associated with the sale including property taxes and HOA fees.
Q. Will the homeowner get any money from the sale?
A. No. A requirement of the lender in granting a short sale is that the homeowner will not receive any money from the sale of the property. The lender is going to take a loss, so they are not willing to have the homeowner receive any money from the sale.
Q. Will I have closing cost to sell my home as a short sale?
A. No, unless otherwise negotiated up front with the bank the seller should not need to bring money to the closing.
Q. What happens if a short sale doesn’t work?
A. The home will likely go to foreclosure. A short sale is something that is attempted after all other options have been exhausted.
Q. Will the homeowner still own the lender money after closing?
A. Maybe or maybe not. The mortgage note makes the borrower responsible for the loan. When the short sale is granted, or if the property goes to foreclosure, the borrower still owes the unpaid balance (deficiency) to the lender and the lender may or may not try to collect this deficiency. Our goal is to have the lender waive the deficiency, and in most cases this can be accomplished. One thing that the lenders’ have been doing in the last year is having the homeowner sign an unsecured note for a partial settlement.
The lender may also grant a full release and total satisfaction, which means that the note is satisfied completely, this is our goal!
Q. What about the 1099 that the homeowner is going to get?
A. If a full release and satisfaction is given, then there may or may not be tax consequences. Talk to your tax accountant because everyone’s tax situation is different. The Mortgage Forgiveness Debt Relief Act of 2007 may pertain to your situation. It states that the discharges of indebtedness on principle residences will not receive a 1099 in connection with a foreclosure or short sale. The act currently affects the tax years of 2007, 2008, 2009, and 2010.
Let us guide you through the process by filling out the basic information below.