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The first thing is you should know is, what exactly is a Short Sale? A Short Sale
is when the lender that holds the mortgage on your home allows for the
home to be sold for less than what is owed on the mortgage balance.
Basically, the lender has to approve that a certain amount of the
balance will have to be forgiven so that you can sell your home. This is
why this method of selling a home is a called a "Short Sale."
The house is being sold short of what is owed on the property.
To better understand, let's use an example of a home that would be
sold as a Short Sale: For example, you bought your home for $400,000 a
few years ago, and you still owe $350,000 today but the market value for
you home is $300,000. An approved Short Sale is the only way that you're
going to be able to sell this home without having to come up with
$50,000, plus costs, out of your own pocket. Instead, the bank is going
to have agree to reduce the mortgage balance, plus costs, in order to
close the deal.
Selling your Orange County home with this method can actually be a
difficult transaction if it's not done right. We've seen real estate
agents waste valuable time by not understanding the intricate details of
how to submit a Short Sale properly. Time is not on your side when
dealing with getting your home approved for a Short Sale. We've seen
many agents in this market, because of lack of knowledge, allow their
clients home to be foreclosed on. And, not all homes qualify for a short
sale, and this is where you really need our expertise to understand what
would be your best move, based on your situation.
Trying to sell your home using the short sale method maybe the only
to way to save your credit, other wise your only other choice is
to allow the bank to foreclosure on your home, which will devastate your
credit. Selling your home as a Short Sale requires intricate
paperwork and persistent negotiations between us, as your real estate
agents, and the bank that holds your loan. We have to be able to prove financial
duress in order for the bank to approve your Short Sale. Basically, we
must prove to the bank your financial hardship and provide bank
statements, proof of job loss (if applicable), or demonstrate that due
to an unexpected increase of mortgage payment, you're financially unable
to maintain timely payments.
Selling a home as a Short Sale isn't without consequences, however.
The I.R.S. may consider any "debt forgiveness" (which is what the bank
is actually doing for you to sell your home as a Short Sale) as taxable
income, which results in a tax liability. Additionally, the bank may
file a deficiency judgment against the borrower (the balance between
what was owed and what was paid). During a free consultation with us, we
can go over some of this information in more detail and explain how you
maybe exempt from having to pay taxes or a deficiency judgment. However,
you should always consult with a tax
advisor or attorney for these types of implications when considering a
Short Sale.
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