The Noonan Group understands that a short sale in real estate is not always a pleasant transaction. We want you to know that we are committed to making this experience as stressless to you as possible. First by letting you know that there is no commission cost in doing a short sale.
There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."
A very large amount of sales in Orange County over the past few years are short sales. That's how prominent short sales have become.
When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.
If you are considering a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:
· Obtain legal advice from a competent real estate lawyer
· Call an accountant to discuss short sale tax ramifications
As Realtors, we are not licensed as a lawyers nor a CPA’s and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.
Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.
These are a few things our negotiator from The Noonan Group will do for you:
Call the Lender
The Noonan Group will call the lender on your behalf. We know the correct department and have established relationships existing.
Submit Letter of Authorization
Lenders do not want to disclose any of your personal information without written authorization to do so. We will provide you with a letter to sign: The letter should include the following:
· Property Address
· Loan Reference Number
· Your Name and signature
· The Date
· The negotiators name and contact info- The Noonan Group
Preliminary Net Sheet
This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Our escrow will provide you with one.
Hardship Letter
The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
Proof of Income and Assets
You have to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
Copies of Last 2 Bank Statements
If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
Comparative Market Analysis and/or Broker Price Opinion
If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). We as your real estate agent will prepare a CMA or a BPO for you – and since we have relationship with lenders, our experience will show.
Purchase Agreement & Listing Agreement
When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to refuse to pay for certain items such as home protection plans or termite inspections.
Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request.
More to come……
