Welcome to PDFfiller Realtor Guest Blog series, which brings you advice from the experts! This week’s post focuses on issues to consider when you short sell your home. It comes to us from Suzanne Coleman of Big Block Realty. For more great posts from Suzanne, check our her blog at: http://homesforsaleinsanteeca.com/
Thinking of short selling your home in CA? Although short sales have decreased dramatically, they are still a viable option for some homeowners. First, what is a short sale? A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property. In a nutshell, if you owe more on your home than it is worth; have experienced a hardship which impedes your ability to make your mortgage payment; and you want to avoid foreclosure, a short sale may be a good option for you.
Homes for sale in Santee, CA tend to sell quickly these days. Inventory is very low and demand is very high. So the opportunity is now. Currently the shortage is technically considered income, however Federal guidelines allow for this “income” to be forgiven in 2013. This could change for 2014.
Know your options
Although short selling your home in Santee may be the best option, it is wise to contact your lender and explore potential relief programs they may offer. Some banks offer deeds in lieu of foreclosure, loan modifications (some permanent, others temporary) an opportunity to refinance, and others. It’s worth your time to look into in order to avoid a foreclosure.
Get a real estate agent who has successfully closed short sales
Find a Santee real estate agent who has successfully closed more than a few short sales. Each situation is different, so your agent should be seasoned. Each mortgage lender has a different process and system they utilize. Your Realtor should also assist you in exploring the options mentioned above with your lender if you have not done so. Realtors like listings, but prefer to have lifetime buyers and sellers because we help choose the best option for you. If you decide to short sell, your agent will assist you to complete an authorization for them to speak on your behalf to the bank. In most cases, the Realtor, while remaining in very regular communication with you, should handle any further interactions with the Bank.
Get your tax person involved
Bottom line, laws change. More importantly, no matter how great your Santee Realtor may be, trust me, they do not know the tax laws like your good old tax preparer. If you do your own taxes, it is worth a visit with a CPA to discuss any potential penalties or consequences of your course of action.
Because your short sale will require approval from your mortgage lender there are some paperwork details that differ from a “normal” sale. First you will be asked to provide a Realtor Authorization Letter. This letter, signed by you, should include all of your contact information, your loan number, all the contact information including license information for your Realtor and verbiage allowing your Realtor to speak to your lender on your behalf. The next item you will be asked for is a Hardship Letter explaining the details as to why you are no longer able to make your payment. Common reasons include change in employment status, divorce and even death of a mortgagee on the loan. Be prepared to prove your change in circumstances. Finally in addition to the regular paperwork your Realtor will help you complete, you will be asked to get a notarized “Arm’s Length Affidavit”. This form specifies that your transaction is not between you and a relative or business associate.
Know that it will be anything but short in most cases
More often than not short sales take an eternity to close. “Short” refers to the proceeds falling short of paying off the debt and has nothing to do with the time is takes to get a short sale finished. That said, some banks are well equipped to handle short sales, others woefully slow and unprepared. This is another reason to have a real estate agent experienced with short sales, who will take charge and be proactive.
You can buy again
Although short selling your home certainly wasn’t what you envisioned when you bought, understand that the opportunity to buy can happen again. Banks are currently offering programs for individuals who had to short sell or who have a bankruptcy or foreclosure in their credit history. There are qualifications and time frames, and these change frequently. The Realtor that helps you short sell your Santee home, should be able to connect you with lenders who specialize in buying again.