Short Selling Your Home – What’s Involved?
If you’re considering short selling your home, you need to know what’s involved. The bank or lender will retain a portion of the proceeds to pay debt. This is a great thing. To determine a fair selling price, the seller must carefully review comparable sales in that area. The agent’s knowledge is invaluable. A buyer might be tempted to offer less, but the agent will help them determine its fair market value.
Another benefit of a short sales is the shorter time it takes to purchase a new house. If the short sale is approved, you can get a mortgage in as little as two to four years, compared to three to seven years for foreclosure. You also avoid the possibility of a deficiency judgement, which is when a lender pursues you to make up the shortfall. Of course, there are still tax implications involved, and it may take months to get the final approval of a short sale.
The first step in the process of short selling is to obtain a market appraisal. To get an accurate value, you should have multiple appraisers visit your property. The bank is more likely to agree to a short sale if the appraisal is lower than the actual value. It is important to show the lender that you would lose money if your home was foreclosed. For borrowers who have fallen behind in their mortgage payments, the best way to avoid foreclosure is to use the short sale process.
Next, you need to file a hardship letter with your lender. The lender will only approve a quick sale if the homeowner is in serious financial trouble. A lender will approve a short sale more than a chronic problem. If you are uncertain about your ability or willingness to pay, a short-sale package may be able to help you get the approval that you need. A short sale can be a great option to sell your house without making a large mortgage payment.
After you submit your financial package, the bank must accept it. This can take several days or even months. A counter-offer can be made by the bank, which could lead to a longer closing. The longer the process takes, the more likely the bank will deny your short sale application. For this reason, a real estate attorney or broker can work with you to speed up the process. You need to be aware of all the details when selling a short property.
Once you have obtained the approval of your lender, you must file a 1099 C tax return for the amount owed. The borrower will also be issued a 1099 C tax form detailing the amount owed to the bank. If your home was sold for $70,000 but your lender has collected $100 in taxes, you will be charged a tax on the difference.
Short sales can be a great way to avoid foreclosure. The lender’s backlog in foreclosures can make the process take several weeks. The original lender’s willingness accept the deal is also a prerequisite for the lender’s approval of your sale. It is difficult to complete short sales so be patient. If you need to sell your home quickly, it’s best to set a fair price and market it to your target buyers.
As the bank pays the commission, short sales give homeowners peace of mind. Short sales also allow homeowners to remain in their home during the process. Additionally, sellers don’t have to pay the real estate agent’s commission. In addition, lenders usually cover the closing costs of a short sale. This can save you money in the long-term. This will allow you to buy another house in the long term.
The decision to purchase a short-term home depends on your individual circumstances. Before you submit an offer, make sure you do your research. A real estate agent can provide information about past foreclosure filings and the amount owed by the seller. You may need to negotiate with sellers to get the best deal. If you aren’t satisfied with the terms of the deal, you can walk out.