5 Things to Know About Short Sales
STEP ONE – DO YOUR HOMEWORK
When it comes to your home – know your options. If money is tight but you want to keep your house consider filing for bankruptcy. A bankruptcy may stop or delay the foreclosure process and might allow you to stay in your home and repay your lender under different terms.
If you are upside down on your home, and don’t want to declare bankruptcy or face foreclosure, then a short sale of your home may be your best option. A short sale can have tax implications, so talk it over with your tax consultant and real estate agent beforehand.
STEP TWO – GET HELP
Hire an experienced local real estate agent who knows how to manage short sales. Your real estate agent will be able to deal and negotiate with the mortgage company on your behalf. An experienced short sale agent will give you a much better chance of successfully short selling your home.
Since banks are a big part of the short sale transaction, find an agent who has experience with lending and a background in working with lending institutions. And, just because an agent says they have experience with “short sales” does not mean they have actually done one! When interviewing a short sale specialist, ask these questions:
- How many have you closed this year?
- Do you negotiate or do you farm it out?
- How much will this cost me? (Correct Answer: NOTHING)
STEP THREE – GET ON IT
Get started with the short sale process right away! Less time means less of a chance to sell your home. If you are behind on your payments or you have received a notice of default (NOD) you must act quickly. In this case, time is your best asset and it’s free, so USE IT.
STEP FOUR – DETAIL IS A MUST
An experienced short sale agent will tell you what you need to do to get the house ready to sell. He/she will also price it appropriately, based on current market values. If it is priced correctly, offers will undoubtedly start rolling in. During that time the seller will be responsible for completing all paperwork and providing documentation to the bank. Banks require full compliance in gathering financial documentation for the approval process. Missed details will slow the short sale process and decrease the likelihood of approval all together.
STEP FIVE – CHIN UP & TAX READY
Congress and the President signed a law that likely releases you from any tax implications of a short sale.
Talk to a qualified tax attorney or CPA about this for your particular situation.
Also, prepare yourself emotionally. You’re selling your home. You’ll be moving. If you are already in default, or have a foreclosure pending, this entire situation and the process of short selling your home can be emotionally demanding. You will receive endless phone calls, letters in the mail and people knocking on your door. Know that they are just looking out for themselves by doing their job just as you are for yourself.