Why sell my home as a short sale
Many homeowners in Phoenix are in a situation where they owe
more than what homes are selling for. In these
situations, many sellers need to sell their home but are
left in a situation where they owe more than what the home
is worth--a situation where the seller is "upside down" on
their loan. This is where a short sale may provide a
viable solution for the seller
A short sale is the sale of a home in which
the seller's mortgage holder agrees to accept less than the
balance owing on the home loan. The lender agrees to
write off the portion of a mortgage that is higher than the
value of the home.
For example, the balance owing on a
home is $400,000 but because the market has declined in
recent years, the value of the home has declined to
$250,000. If the owner attempts to sell the home for
its current value, either the owner will have to come up and
pay the difference or the seller's lender will have to agree
to accept less than what is owed against the home.
Why would a lender permit this? Not all
of them do and their decision to allow a short sale is
usually based on a number of factors such as: what is the
house worth? how much will the lender lose in the deal? will
the lender make more money actually going to the foreclosure
auction or is it better to get it sold now? what are
the circumstances surrounding the sale (such as a death of a
family member that has created a financial strain on the
seller or is the seller one of many real estate investors
that made a bad decision)?
Before a lender will approve of a short sale, the lender has
a series of steps and paperwork requirements that the
seller, the buyer, the agents involved, and a few other key
players must meet. These requirements may include (but
not limited to) copies of the seller's financial statements,
copies of the purchase contract, an appraisal on the home,
among others.
If you are a seller considering a short sale, the first step
you need to take is to set up an appointment with your
financial advisor, your accountant, and/or your attorney.
Make sure you understand the full consequences of a short
sale before deciding to embark down that path. In some
cases, for example, the amount of debt forgiven by the
lender may be counted as income to the IRS. There are
exceptions to the rule and make sure you understand what you
are getting into before you do it.
Furthermore, you want to make sure that
the lender will not pursue a deficiency judgment against you
for the difference owing and the amount paid to the lender.
Even though Arizona has anti-deficiency statutes in the law
books, there are some situations where you may have to pay
back the balance (VA loans are one such example).
If you have explored your options and you have decided to
move forward with a short sale in the Phoenix area, give me
a call at 480-888-1234 so that we can start the home
selling process. Lenders are not willing to discuss
short sales for Phoenix properties until there is a buyer
and a purchase contract.
Once we have a purchase contract we
will move through the steps involved in short sale. In
reality, lenders are taking two to three months to negotiate
a short sale in Phoenix and the earlier you can start the
process, the better chance you have of getting it approved.
The short sale process works, but is complicated,
time-consuming and uncertain. If you can start now -- before
you are actually in default -- you will be ahead of the
game.
For more information on purchasing a
short sale in Phoenix, give me a call at 480-888-1234.
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