Short Sales - Pinellas County, FL

Short Sales - Pinellas County

Are You a Short Sale Candidate?

• If you do not have savings of more than $2,500 you would be a good candidate for short sale.
• Have comparable homes sold for less than your mortgage balance? In fact if homes have sold for more than your mortgage balance's) but after deducting 5% real estate commission and 2% for sales costs the net amount of comparable sales is less than your mortgage balances than you are a good candidate for short sale.
• If you see 10 or more homes in any foreclosure category you are a good candidate for short sale.
• If you see in the Foreclosure Law section that your state allows a lender to take a deficiency judgment you will want to pursue a short sale to prevent further economic damage beyond the loss of the home at sheriffs’ sale.

Can I still receive cash at closing, even if I pay the bank less than the full amount due on my mortgage?
Yes, generally from $500 to $2,500. The lenders see this as borrower’s assistance to allow the seller some funds to move from the home in an orderly manner. Some lenders actually consider these to be borrower’s incentives to encourage borrowers to work out a short sale versus going through the full foreclosure proceedings.

I have more than one mortgage on my property. Is that a problem?
No, in some cases it makes it easier. Subordinate lenders are more flexible than 1st mortgage holders.

Do I have to be past due on my mortgage to be able to get the benefit of a short sale?
No, but it is likely that the lenders guidelines will prevent them from formalizing a short sale if the loan is not past due. In cases like this, a Realtor can structure a default to reduce the impact on a borrower’s credit report to enable them to bridge this gap.

What is a BPO?
A Broker Price Opinion is when the lender contacts a broker other than the one that may already have the subject property listed and pays them to render an option on the condition, value and time on market for the property.

How long does it take to complete a short sale?

The time frame for the lender to receive and evaluate the short sale proposal is about 8 weeks. The listing time on the market is almost always longer than this.

Why does the bank accept less than they are due?

They lose less on a short sale. On average, lenders lose tens of thousands of dollars less on a short sale versus a full foreclosure. It is simply in their best interest.

I f a lender saves so much money working out a short sale arrangement, why do they request so much information and why does it take so long for them to work a file?

The lender wants to make sure that a borrower is not just trying to get out of a mortgage on a house that has gone down in value. If the borrower has liquid funds, the lender will want the borrower to use them in the sales process. The lender also wants to make sure the borrower is not selling the property to a related party for the sole purpose of locking in a reduced pay off. The bottom line is that the lender is going to manage the transaction with the objective of recovering the most money for the lender. The time frames involved cover a multi-step negotiation process between the borrower and the lender with either the lender or borrower objecting to certain terms and making various counter proposals before coming to an agreement. Third party inspections and BPOs will also need to be done before the negotiations can be formalized in an agreement.

Can a borrower do this for themselves?
Yes, but doing it alone and on the phone with the lender leads to inconsistent results that are, frequently, not acceptable to the borrower. Working with a good realtor will result in written negotiations and more consistent results. It has historically produced results acceptable to the borrower over 90% of the time.

Will I still need to pay income taxes if I do a short sale?
Debt forgiveness can create an income tax burden for a seller. Currently HR Bill 1876 is pending and this would eliminate the tax and the confusion that surrounds it. Please see the news you can use section on the home page of this site for the text of the bill. There are a number of strategies to mitigate the tax, such as, proving insolvency to the IRS or convincing a lender to consider the purchase price for the loan in the final 1099 totals. Many lenders purchase loans for far less than face value.

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