Excel Real Estate Group

 
Q: What is a Short Sale? 

A: Simply put, a Short Sale is used to describe the sale of a home in which the homeowner owes the bank more than the home is worth. The bank agrees to allow the home to be sold for less than what is owed (AKA “Short Sale”).

Basically, the bank is agreeing to take less money for what is owed on the loan.

Q: Why would my Lender want to allow a Short Sale to help me?

A: With foreclosures on the rise in Washington, banks are looking for any way they can to decrease the amount of loss due to these foreclosures.

Basically, it is much more cost effective for a bank to do a short sale rather than a foreclosure.

Banks aren’t in the business of owning real estate and collecting monthly mortgage payments, so a bank will take a minor loss in a short sale to start that payment cycle again.

The truth of the matter is that a bank can minimize their loss by 10%, 20% even 30% in a short sale over a foreclosure.

Q: How long does it take for you to complete the case once we fill out the paperwork?

A: Typical cases are completed within three to five months. If you have a foreclosure sale date approaching we can usually get the lender to postpone the date of the sale to allow for enough time to complete the Short Sale process.  

A: 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. One HUGE benefit is that the Mortgage Foregiveness Debt Relief Act only protects you through 2012. You can read more about this in the question below.

A: The short answer is that if the property was you primary residence (meaning you lived their primarily) you most likely don't have to pay taxes on the forgiven amount. 

The long answer: There may be tax ramifications to a Short Sale but this is a very “loaded” question. You may have heard, “Don’t do a short sale because you will get a 1099 and have to pay taxes on the difference between what you owed on your home and what you sold it for or the amount the bank wrote off.” This may be true, but this is not the whole story… If you borrow money from a lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt. The thing that most people don’t know or don’t tell you is that with a Foreclosure, you will also get a 1099. In the case of a Foreclosure the 1099 is called a “1099-A.” So what’s the difference between a 1099-C and a 1099-A? The ‘C’ stands for “Cancellation of Debt” and the ‘A’ stands for “Acquisition or Abandonment of Secured Property”. The differences are much more than you get the ‘C’ with a Short Sale and the ‘A’ with a Foreclosure. It is important to know that while there are many differences, the tax consequences for the ‘C’ and the ‘A’ are the same. You may not even be required to pay taxes on the ‘income’ as shown on the 1099-C, but don’t just assume that you won’t have to pay. While we are very good at successfully closing Short Sales, we are not tax experts.

Before making your final decision, first consult a CPA or Tax Preparer.

The Mortgage Debt Relief Act of 2007 provides relief to many, many homeowners. For more information on the Mortgage Debt Relief Act, how it works, who it applies to, and more, please read more directly from the IRS website by clicking here .

Q: Will I qualify to do a short Sale?


A: Probably! Contrary to popular belief, it is not difficult to qualify for a Short Sale. A good Short Sale candidate has no equity in their home. They are not able to sell their home and pay off all of the outstanding loans/debt that are secured against their property.

If you owe more against your home than it is currently worth and want or need to sell it but can’t or won’t bring cash to closing to make up the difference between what you owe and what your home is worth, then you are a prime candidate.

A: We would like to say: “Yes!” But the truth is, short selling their home isn’t the right move for everybody. Here are a couple of important signs that can help you determine if doing a short sale is right for you:

• You are behind on your mortgage payment and are unable to keep up with all of your monthly obligations. Some of the reasons for falling behind on your mortgage payment may include sudden change in monthly household income, loss of job, divorce, and more.
• You are NOT behind on your monthly mortgage payment but know that you will soon be unable to keep up with all of your monthly obligations and therefore in the near future will not be able to afford to keep your home.
• You are NOT behind on your monthly mortgage payment but need or want to move. Reasons could include a job transfer, a health reason, retirement, and more.
• You are NOT behind on your monthly mortgage payment and have come to the decision that staying in your home is not a good “business decision” or “financial decision.”

If you match any of these scenarios then doing a short sale could be the perfect solution.

A: Yes, we are currently working with all banks. Unlike some agents and investors, we do not “selectively choose” which banks we work with and which banks we won’t. We have experience in working with over 50 different banks/lenders across the United States.

A: You won't find a more experienced and knowlegable short sale team in the Greater Seattle Tacoma area. We will give you the best chance of getting your short sale approved in the shortest amount of time possible. Don't put your financial future in the hands of an agent who may not know the process well enough to get your short sale 

A: Obviously, this depends on a lot of factors including how well you pay your bills after the short sale process is complete. However, it generally takes about 2 years before you would qualify to purchase another home.

A: This question is asked very frequently and has many different variables involved. The first thing to keep in mind is that the moment you go 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureaus that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit. After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reported on their credit report. When the actual Short Sale is completed, most banks will report to your credit report that your account was “paid in full for less than the full amount.” Your credit report may also be marked as “settled.” It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to Foreclosure you would most often see the bank report “Foreclosure” on your credit report. It is difficult to gauge how much of a credit scoring affect a Short Sale has vs. a Foreclosure. Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse.

A: This question is asked very frequently and has many different variables involved. The first thing to keep in mind is that the moment you go 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureaus that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit. After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reported on their credit report. When the actual Short Sale is completed, most banks will report to your credit report that your account was “paid in full for less than the full amount.” Your credit report may also be marked as “settled.” It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to Foreclosure you would most often see the bank report “Foreclosure” on your credit report. It is difficult to gauge how much of a credit scoring affect a Short Sale has vs. a Foreclosure. Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse.