Puppy Realty
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Short Sale FAQS

What is a Short Sale?

A Short Sale or sometimes called a Pre-Foreclosure Sale is when a seller must sell their home but the market value of the home is less than the mortgage balance. A short sale is usually the only option left if a seller can’t qualify for a loan modification or other loss mitigation options. Simply put a short sale is when an owner sells their property and the value of the home is lower than the owner’s loan amount.

Will my bank allow a short sale?

Many people fear when they fall behind on their house payment that their bank is going to foreclose and kick them out of the property. In reality your bank would rather work with you on a solution instead of going to foreclosure. A foreclosure costs banks tons of money in legal fees and the property usually sells for much less than if it was sold as a short sale. Your bank does NOT want to foreclose. Foreclosure is a last resort. The reason your bank will prefer a short sale is because it decreases the banks loss to allow you to sell your house. Also foreclosure can take a long time up to 3 years in some situations. The bank would rather get your property liquidated quickly with a short sale.

Will My Financial Institution assist me financially in making a Short Sale Happen?

The Short Answer is YES! Depending on your Lending Insitution and the program you qualify for, you can receive anywhere from $1000 to $30000 in Relocation Assistance from your Lending Institution. This is Cash, Paid to you at closing, not deducted from the shortfall on your Property.

Will my bank come after me for the unpaid balance?

Most of the time your bank will not pursue you for a deficiency. They will provide a letter stating they will not pursue a deficiency balance when they approve the short sale. There are some rare situations when a seller has an abundance of cash reserves and some unique second or third mortgage loans when the bank will not waive the deficiency but our experience is that the bank will NOT go after you for the balance. If you have concerns about your situation or your bank we can discuss that with you and share our experience we have had with your specific bank. Almost all the time you will be safe from a deficiency balance. Your bank will charge it off.

Will I have to pay taxes on the loss?

The short answer is NO. Currently the IRS has in place “The Mortgage Forgiveness Debt Relief Act and Debt Cancellation”. This Act states that you will not pay taxes on the loss incurred by your bank. Prior to 2007 this was not the case and many home owners involved in short sales faced tax consequences. That is not true today. There are some exceptions but most short sales will fall under this Act and you will not pay taxes. The link about will open in a new window and take you directly to the IRS web page where you can read the specifics directly from the IRS. Disclaimer: As real estate agents we are not authorized to give tax advice. Please consult with your tax professional to advise you on taxes.

Can my bank take my retirement, car, savings etc.?

A bank can not take your retirement, savings, car, other home, kids or dog. This is not possible. It is possible a bank could file a lien against you but this is not normal in a short sale. If you are working with your bank to resolve a short sale they are going to work with you and not become mean and nasty. Once they waive the deficiency they can no longer pursue you for money. Disclaimer: As real estate agents we are not authorized to advise you in legal matters. If you have concerns about what your bank might or might not do in a short sale you should seek legal counsel.

How much will it cost me to short sale my home?

Your bank will cover all of the selling fees when doing a short sale. You WILL NOT pay us a fee to short sale your home. Other short sale services will charge you but Our Services Are FREE! Your bank will pay commissions, taxes, closing fees, title insurance etc. We can even get your bank to pay money toward your second and third mortgage and other liens on the property. You will be responsible for paying your own utility bills. The bank will not pay your utility bills.

How long will it take to short sale my home?

All short sales are a little different. All banks are a little different. If you qualify for HAFA or FHA Short sale that can affect the amount of time to process the sale. Our team is set up for success and we close over 95% of our short sales. Most of our short sales close within 45 to 60 days. The industry average is around a 20% success rate and most agents will take 9 months to a year to get a short sale approved and often times end up in foreclosure. We have closed hundreds of short sales and have a track record that is unbeatable. You should never place yourself in the hands of a real estate agent who hasn’t worked many short sales. It is likely you will be foreclosed on.

Do I have to be late on my payments to do a short sale?

You do not need to be late on your payments to complete a successful bank short sale. Sometimes it will depend on the bank we are dealing with. Just remember you need to be in a hardship situation. A reason for NOT approving a short sale is: You don’t like the neighbors dog. An approved bank short sale requires a true hardship situation.

Will Lenders work with Investors and/or on Commercial Properties?

YES! It used to be that Lenders would not work with Investors, but no longer. They realize that many Investors, who purchased during the "Boom" times, also owe more than their properties are worth. Rather than go through the costly Foreclosure process, almost all Lenders now worjk with Investors to liquidate these properties. The Commercial marketplace has recently become a hotbed for Short Sales as well, as Lenders have come to understand that the same rules apply to these properties and the losses they face are far greater than on individual homes.








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