A short sale is a negotiated arrangement with the lender[s] on a property that allows the property to be sold for less than the full amount of the loan[s]. The lender typically allows a real estate commission and other costs to be paid from what could have been loan proceeds. The remaining deficiency difference between the shorted payoff and the amount owing on the loan may be forgiven or may not, depending on lender policies and whether the short sale is done under the auspices of a government program.

A distressed property owner has to show documented evidence of a hardship, such as loss of employment, illness, business failure, inadequate cash flow to make mortgage payments. The property owner cannot have any personal financial liquidity from bank deposits or securities, although currently lenders are exempting retirement assets in 401K or IRA accounts from this calculation.

A distressed property owner has to show documented evidence of a hardship, such as loss of employment, illness, business failure, inadequate cash flow to make mortgage payments. The property owner cannot have any personal financial liquidity from bank deposits or securities, although currently lenders are exempting retirement assets in 401K or IRA accounts from this calculation.

For the lender, it typically gets the lender more funds recovered and more quickly. For the borrower, it usually results in a “grey mark” on the borrower’s credit report and an impact lasting about three years. A foreclosure is viewed as a black mark, the effect of which could last for seven years. It lasts for two years, affecting the ability of the borrower to obtain another mortgage. description

The Borrower must be clear about the services the Short Sale Company or Realtor provides. Is the short sale facilitator simply a buyer with no fiduciary obligation to the Borrower?

The pricing of the property is a definite concern. The price must be low enough to sell the property in a challenging market and high enough to satisfy the lender.

Time frame expectations for short sales typically range from 120 to 270 days for continued collection or a lawsuit, depending on lender efficiency and market conditions.

Will there be a release from deficiency? The Borrower should ask the lender about their deficiency policy if there is no reference to the deficiency in the Short Sale agreement. The continued collection could happen, or the lender may agree to a settlement over time on the deficiency.

Maybe, and the Borrower should contact a CPA or tax attorney for advice. Section 108 of the IRS Tax Code may be applied, thereby mitigating or eliminating tax consequences. Do not rely on the comments of a realtor or short sale company for this opinion unless they are a practicing tax professional as well.

Absolutely, yes, we do. If you don’t have a Realtor on board, we prefer to include one of our team members with extensive experience in short sale processes. We can, however, include a realtor selected by you on the short sale team a Realtor chosen by you if the Realtor agrees to the increased responsibilities of their role and cooperates fully with Short Sale Specialists.

What is the experience level of the Short Sale Facilitator or Realtor? Many Realtors hold themselves out to be capable in this area but have taken a one-day course and obtained a few initials behind their name. The Realtor may include the service as part of their commissions, but this is viewed by many Realtors as a low-paid assignment. A specialized Short Sale Company may charge the Borrower a fee or have the actual Buyer pay the fee at the time of closing. Being willing to include a fee for these services could be the wisest course of action because the short sale process is time-intensive and requires a combination of understanding of the mortgage industry, the real estate market, and finally, the ability to advocate on the Borrower’s behalf with the Lender’s Collection/Loss Mitigation Department. Short Sale Specialists is committed to the role of advocate for the Borrower [Seller] under a contingent fee agreement, with the negotiating fee paid by the Buyer.

Sellers in a short sale may receive a Moving Allowance Payment from their lender. This is conditioned upon sellers being owner-occupants in residence at the time of or immediately before closing the short sale. Payment is conditioned upon the sellers’ lender having such a program available, and payment is entirely at the lender's discretion. The range of $1000 to $3000 for a Moving Allowance Payment is typical in 2021 when the sellers’ lender provides such a benefit.