What is a Short Sale?
When a homeowner owes more than market value on their home, their lender agrees to sell the home at fair market value or a little less, therefore selling it “short”. This is debt forgiveness or mortgage forgiveness. It’s a very common practice in the lending business, unbeknownst to the public.
Who can “qualify” for a Short Sale?
Contrary to the popular option, most people think you have to have a hardship and be delinquent on your payments to qualify for a Short Sale. Our experience says that the lenders are many times willing to loss mitigate even cases of non-delinquencies or non-verifiable hardships. Of course, there are no guarantees, but our success rate shows it can be done.
What is the HAFA program?
We have setup a page that outlines the HAFA Program. This info is directly from the “official” HAFA website.
Why should I hire your team / Short Sale Division?
Our team here at Keller Williams East Valley and The Melville Team has experience in the last 3 years closing over 350 short sales. We are an open environment of learning and masterminding with other top agents throughout the valley. We are constantly changing, enhancing and revamping our process and strategies for more effective negotiation for successful transactions with our fulltime Short Sale Coach. You can see we are committed to constant improvement to make the home owners transaction more efficient, successful and less of a burden.
Do you work with all banks and/or investors?
Yes, we have determined that it is the best interest of our clients to work with all banks and/or investors. We have learned that although some lenders/investors are more efficient than others, our team is committed to making all transactions work, regardless of the bank. Our mindset sets us apart from the rest.
Does the Short Sale cost me anything?
In a Short Sale, in most cases, the lender (not the homeowner) will pay any and all Real Estate Commissions. In some cases, there may be HOA or tax related costs that may be requested of the homeowner. We work to minimize those or cancel them out completely.
When working with The Melville Team’s Short Sale Division, we require a $500 upfront investment from the homeowner to retain our services. Short Sales are not traditional… we spend up to 32 hrs on the phone before we even have an approval. This is a business decision we have decided to make, this enables us to engage 100% with our seller knowing our seller is 100% committed to us and a successful Short Sale Transaction.
What is the Mortgage Debt Relief Act of 2007?
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
Just because it exists, does not mean everyone qualifies. Consult your CPA or ask us for a referral.
Why do banks agree to complete the Short Sale?
Banks never, ever… want to foreclose on your property. We could explain this, but it would take 65 pages and 9+ hrs… Banks lose on avg 28-36% more on a foreclosure VS. Short Sale.
Along with this, when a Short Sale is closed, here are a few benefits
1. Stimulates the economy with different parties being paid for services rendered.
2. Reduces potential tax liabilities for homeowners over foreclosure.
3. Most importantly, banks have regulations that limit the amount of money they can lend when the have nonperforming assets or a foreclosed home on their books. A Short Sale releases that and they can get back to lending!
What is the success rate for a Short Sale?
The market average is less than 30%… At our office, we close them at a rate better than 60%.
Can I be sued by my lender?
State statues in Arizona are ambiguous and have not been tested in court. Although deficiency liabilities, which could result in lawsuits, we recommend all our clients consult with a Real Estate Attorney. We can send you a few choices, just let us know. Attorneys can be informed and develop strategies around this prior to starting the Short Sale process. As with tax liabilities… financial deficiency/liabilities come with exclusions as well. A good Real Estate Attorney will identify if they apply to you and if they are beneficial to pursue.
How long does my lender take to foreclose after I miss my first payment?
Generally speaking in the state of Arizona, most lenders file notice of defaults within 90 days of missing your first payment. We have seen lenders not file for over a year and some as little as 30 days. Since we don’t know when it will be, we can tell you that when they do file it, we are on the 90 day timeline. We need to get it extended and/or approved to close as a Short Sale. We’ve had huge success getting Short Sales extended on multiple occasions and sometimes indefinitely.
When should I hire your team to start the Short Sale process?
We recommend everyone discuss their options with us the minute their situation turns grey, becomes emotional or creates uncertainty. Don’t wait until your lender serves you with a Notice of Default or go delinquent to consult with our team. We can help you develop a strategy to win before ever missing a payment.
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To request our Services, please fill out the following Short Sale form
