What is a Short Sale?

What is a short sale?

The term Short Sale came from the fact that the Lender’s payoff is coming up “short”.  It occurs when a Lender agrees to the sale of a property for less than the amount owed on a mortgage. A short sale package includes: Purchase and Sale Agreement (from Realtor), Addendum to Purchase (from Realtor), Authorization to Release Information, Two Years FULL Tax Returns , Two Months Bank Statements (Most recent), Last Two Pay Stubs, Fill Out Financial Worksheet, A Handwritten Hardship Letter, If FHA, Form 90036 and Homeownership Counseling Certificate.

With short sale, the rest of the homeowner’s debt is forgiven. Rather than suffer the lengthy and expensive foreclosure process, a homeowner agrees to a short sale though the sale of your Moreno Valley CA Home, for instance is less than the owner owes on the mortgage.

Foreclosure is definitely not the only option. A short sale is a better alternative. For one, a potential buyer will get the home at a reduced price. The Seller will get out of the mortgage liability and will definitely not face bankruptcy. On the hand, the lender will not be facing the arduous protracted process of foreclosure even if he agreed to a loss from accepting a short sale.

Although a better option than foreclosure, waiting for the lender to agree to a short sale can be lengthy and hard. But if you’re on the way to short sale your Homes for Sale in Moreno Valley California , Realtors advise that you seek help from a real estate agent short sale expert. Here’s what they say:

1. Check if the indeed the Lender agrees in writing that all debts in the short sale process was forgiven.

2. Make sure how the short sale will be reported to your credit report. Take note that even if the short sale is marked as ‘settled for less than the full balance,’ this could still show a negative mark on your credit report.

3. Ask your real estate agent about the tax repurcussions of a short sale. So, if your Home in Moreno Valley California was agreed to a short sale for $30,000 less, then a 1099 for $30,000 will be issued by your lender and you would have to pay taxes on.

Short Sale, as Realtors say, is a win-win situation. If you ever decide to buy another home, short sale has an advantage over foreclosure.