There is no exact answer, Generally, Short Sales take three to four months. It is possible for it to take up to five months. IF a government guaranteed loan is involved(FHA for instance), it can take longer to settle.
A common saying is that banks are in the business of lending money and do not want to own real estate. This is slightly misleading but is essentially true. When a bank takes a property back via foreclosure, it is a long and expensive process and often results in holding the property in their inventory as a non-performing asset. Banks have a limit to the amount of non-performing assets they want to hold. Once this limit is exceeded, they have strong incentive to get rid of the properties at discount prices.
For a lender, doing a short sale avoids many of the costs associated with the foreclosure process. Attorney fees, delays from the borrower bankruptcy, damage to the property, costs associated with resale, property tax, insurance, etc. All must be paid by the bank during a foreclosure. In a short sale scenario, the lender is able to cut its losses by getting rid of the property faster.
It is best to begin a short sale when you realize you can no longer afford the mortgage, so that your property can be marketed properly and you can receive a high offer. The earlier you start, the higher our likelihood of success. We have negotiated short sales that have already gone to foreclosure sale. Contact us to see if you have enough time.
Just starting a Short Sale will not automatically stop a foreclosure. However, in most cases we can get the lender to postpone the auction date.
First and foremost, it relieves the stress of being in foreclosure and being hounded by the mortgage lender, and it allows it homeowners to get rid of their big mortgage payment and move on with their lives. A short sale allows you to stop the foreclosure and get a fresh start. In my experience this is the primary benefit to homeowners. They are tremendously thankful to just relieve the burden that their home and mortgage have become.
A short sale also prevents additional damage to your credit. Having some late payments and a foreclosure filed has already done damage to your credit. However, a completed foreclosure will do much more damage and lower you credit score tremendously. Obviously, if you have declared bankruptcy, that is a huge black mark on your credit. A short sale results in the mortgage actually being paid off, which reflects positively compared to foreclosure.
The purpose of a short sale is to sell a house. Plan to move just like you would in any real estate transaction.
You don't. We cannot and will not make any promises. Once you missed a payment, the lender is in charge and can proceed with a foreclosure if they want to. The lenders do short sales to save money. We have very experience negotiators but the lender will do what they choose to do.
Your home will go to auction.
No, you should never give power of attorney to short sell your property.
No, we do not purchase your home.
As of June 12, 2008, Washington State RCW 61.34 will change the way investors and realtors work with anyone in foreclosure. If someone approaches you and you are in foreclosure, they are legally considered a "distressed home consultant". A "distressed home consultant" legally is required to act as a "fiduciary agent" on your behalf; in other words, they must put your best interests before their own. THey must disclose in writing how much profit they intend to make, what they intend to do with your property, what they currently value the property at and other "material facts". A distressed home is owned by a person who falls into any of the following categories:
The Law states that any buyer purchasing a home 20 days before an auction classifies as a "Distressed Home Consultant".
Foreclosure show up as FORECLOSURE, and can stay on your record for seven years. Anytime you apply for a new loan or have your credit run, the foreclosure will show up and is usually a required disclosure you must make on most credit and job applications. A short sale is listed as SETTLED DEBT, and is much less harmful to your credit. Please consult a credit company for more information.
A satisfaction is a total release from the debt owed. A release is when the lender releases the lien from the property to allow the home to be sold. (The borrower may still be required to repay the balance of the debt.)
A lender may offer to "release" its security interest against the property in exchange for less than the total amount of the note (loan). A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied. Advantages: This successful Short Sale will allow the property to be sold and avoid a foreclosure. Disadvantages: The remaining debt on the property (sometimes called a "deficiency") still exists. You are still liable for the note and you still owe the debt. Reality: It is not likely that the lender will pursue the deficiency unless you have other significant assets.
A lender may agree to accept less than it is owed as a complete and total satisfaction of the note and release its lien against the property. Advantages:Your note obligation to the lender are satisfied for less than you owe. When the property is sold, the debt is off completely. Disadvantages: You may have some tax consequences that you should discuss with your tax advisor due to the fact that the lender is making money you owe disappear. Sometimes our negotiations are successful in obtaining a satisfaction.
Yes. If the cash offer is enough to cover your mortgage debts, back payments and interest. They can also purchase your property cash once obtaining the letter of acceptance from the bank on a negotiated short sale if they purchase your note.
NO! Getting cash back would be taking money that otherwise belongs to the bank. Receiving cash from an investor would be committing fraud to the bank with intent to decieve.
The lender starts the process by sending out a BPO (Brokers Price Option) real estate agent to appraise your home. The BPO agent is not a licensed real estate appraiser. Many lenders use a BPO to establish value rather than an appraisal simply because they are faster to do and cost less, approximately $50 for a BPO compared to $400 for an appraisal.
In a short sale, it is possible the bank could issue a 1099 to you for the difference in what you sell your property and what you owed. This means the IRS could consider the difference as income, and you could be taxed on that income. The bank might also ask you to pay a portion of the difference back in the form of an unsecure note, which is similar to an I.O.U. It is a negotiation, and we employ tactics to have the bank consider the debt settled.
If this is a concern to you then you need to consult an attorney or CPA. When a lender "writes off" part of a loan, it has to account for where that money went. In the case of a short sale, it is determined that the amount goes to the foreclosed homeowner, since it is their personal debt that is forgiven so that the house can be sold. The bank can account for this in one of 2 ways.
Either the bank keeps the amount of the discount on the books as a bad debt and they can go through the courts to try and collect from you on the bad debt or the bank can issue a 1099C form to you for the amount forgiven and that amount can be considered "phantom income" for you. Again, please consult a CPA or tax adviser if you have specific questions. If you receive the 1099C and declare it as income, as you should do, there is a good chance you will owe very little tax if any at all. This is because there is an IRS rule regarding "Insolvency", which essentially says if you are insolvent(more liabilities than assets) at the time of the short sale, then you don't have to count the 1099C as income. There is an IRS form you can fill out to show you are insolvent.
The bottom line is that typical people who are in a foreclosure or short sale situation have little income or assets, so the 1099C is usually not counted as income or the tax rate you might pay is very low. Again, ask your tax person or you can call the IRS for free advice.
Washington state foreclosure law allows lenders to use either the Non-Judicial or Judicial Foreclosure Process. If there is no "power of sale" clause present in the original loan documents, the lender will pursue Judicial Foreclosure. The lender must sue the borrower in court and foreclosure can be declared only by the court. A deficiency judgement may be awarded to the lender if the property is found by the court to have been abandoned for at least 6 months before the decree of foreclosure. If a "power of sale" clause is present in the original loan documents, the lender can pursue Non-Judicial Foreclosure. This clause authorizes the lender to sell the property in the event the borrower goes into the default on the loan. If the "power of sale" clause specifies the time, place, and terms of the sales, then those details must be used.
The Non-Judicial Foreclosure process is the most common in Washington State and does not allow for the lender to sue the borrower to obtain a deficiency judgement.