Here are the answers to the most Frequently Asked Questions about Short Sales:
1. I can’t make my house payments, but I do have an ability to pay back all or part of the negative equity. Also, I want to preserve my credit score. Is a short sale right for me?
Probably not. In cases where the seller can pay back all or part of the negative equity (usually to the second lien holder), it may make sense for the seller to work out a repayment plan.
2. If I pay mortgage insurance and default on my loan, why wouldn’t that cover the deficiency amount?
The mortgage insurance is not there for your protection; it only protects the mortgagor (or lender).
3. Do I have to have my home “Approved” by the lender prior to offering it for sale as a short sale?
No. Technically speaking, there is no such thing as being “Short Sale Approved.” The actual approval only happens with an accepted offer.
4. I just missed a payment and I know I will miss more. How long does the foreclosure process take and is there time to do a short sale?
The foreclosure process takes differing times depending on your state. In the Midwest, a foreclosure can take over a year. In California, it takes over 6 months. Generally speaking, a well-priced short sale being processed by an educated short sale listing agent will sell and close in less than 120 days.
5. Will I still have to pay property taxes if I do a short sale?
Property taxes will always have to be paid as part of any accepted short sale. Whether it’s paid by you or by the lender will depend upon the terms and conditions of the short sale approval.
6. I owe more than my home is worth and I can’t make the payment. Do I have to somehow qualify for a short sale?
In almost all cases, if you have a financial hardship which you can demonstrate, you will qualify.
7. Do I have to pay income taxes? I have heard that I will get a 1099. Will the loss the bank takes be treated as a taxable gain to me, the seller?
Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no taxes due.
8. Who pays the real estate agents’ commission?
The bank will pay the commission along with all the other usual closing costs.
9. Do I have to miss a payment to do a Short Sale?
No. While this will sometimes delay the short sale, most major lenders have started accepting short sale offers from sellers who have never missed a payment.
10. I want to do a short sale and have a second mortgage, does this make me ineligible?
No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve both first and second lien holders. The process is the same regardless of the number of liens.
11. Does a borrower need to sign a Power of Attorney when processing a Short Sale?
NO! At no time should a borrower sign a power of attorney to process a short sale.
12. Can you guarantee that my short sale will be successful?
We can guarantee that we will do all that is required to complete a successful short sale. Unfortunately, we cannot guarantee what the lenders will make as their decision. At Broadpoint Properties, we know what the lenders require and are looking for as a discounted price. This makes our success level much higher.
We can help sellers throughout San Diego North County and beyond to avoid foreclosure and walk away from their home without having to pay a penny, and without having their credit ruined by foreclosure or bankruptcy.