FAQ on Short Sale
Many property owners end up confused if short sale is the solution on their mortgage dilemma instead of trying the options for foreclosure. To understand short sale, here are some of the frequently asked questions that you might also have in mind.
A short sale happens when the banks lets you put up your home on sale even with an amount that is less than the actual amount you own. It is considered a privilege that the bank can grant. It must be made clear that not all homeowners are given this opportunity. Not all banks also allow short sale.
There is actually no absolute answer for this. In some cases, foreclosure can be the easiest way to get rid of your problem so you can ask an expert on the options for foreclosure. Foreclosure is often the step to take for those who do not want to through the stress of the short sale process. It mainly depends on the legal and financial consequences you are willing to take.
Yes, it is. To have multiple offers, you may set your short sale price below the existing market value. There also other ways such as through bidding. However, the price should not be too low as the bank may not take a very low bid. Also, some property hunters might make extremely lowball offers.
The magnitude of the effect on your credit rating still depends on the deficiency remaining. When there is a huge deficiency on the owed amount, it will mostly likely affect credit score. If the deficiency is not that significant, credit score may not be that affected.
Yes, it is allowed. However, individual negotiation is necessary.
To take the best steps in doing a short sale, it is best to hire a legal expert in doing a short sale. Doing a short sale is crucial, and understanding the laws and terms and conditions is important. A lawyer can fully explain the steps and consequences. Similarly, a lawyer can negotiate on your behalf, especially if you have a very complex situation. You may ask your agent or trusted advisers on the most recommend legal expert to hire.
During the start of the “short sale mania”, which mainly began in 2005, financial hardship is a basic criterion before one can be allowed for a short sale. However, given the number of property owners that need help today, some bank investors allow them to do a short sale even if the scale of financial hardship is not yet in its worst case. Instead of trying some options for foreclosure¸ property owners try short sale as a solution to their problem.
This is really hard to answer directly as it depends on whether the tax is on federal income or the property itself. For sure, you need to pay extra income tax once the bank sent you 1099 in a case of deficiency. Meanwhile, someone certainly needs to settle the property tax. It can be you or the lender—it is dependent on the existing policies and agreement you have reached in the process of negotiating the short sale. Thus, this has to be made clear.
The following banks are able to help you: Citi, Wells Fargo, Nationstar, Bank of America, Chase JP Morgan, SunTrust Mortgage, GMAC, PNC Bank, BBT, and Onewest.