Short Sales

For Sellers:

A short sale occurs when the proceeds of your home sale will not be sufficient to fully repay your creditors. Because of this, it will be necessary to come to an agreement with your creditors to accept less than the full amount of the debt your owe in order to release the liens on your property. Without this agreement, your home cannot be sold (unless you are able to bring money to the closing.) If you are facing foreclosure, the decision to proceed with a short sale or to allow the property to be foreclosed is a difficult one. You should consult with an attorney or tax advisor before making your decision. There are also several nonprofit organizations that may be able to help with this decision.

Should you choose to pursue a short sale, there are a number of issues to keep in mind:

• Your creditor will likely communicate with you by mail to indicate whether it will accept less than it is owed. If the creditor approves, the creditor will agree to release the liens on the property. But you should also determine whether the creditor intends to waive its right to any shortfall, or whether it intends to pursue you for the shortfall after closing. If the communication regarding this issue is at all unclear, it is very important that you contact the lender for clarification before continuing with the sale.
  
  
• If your are in the proces of foreclosure, it is important to understand that the process will continue even though you are pursuing a short sale. Typically, a foreclosing lender will not delay the foreclosure process because you have the property on the market or even if you have a purchase agreement signed. Therefore, you need to stay informed about your foreclosure process, and in partioculalar understand the redemption period deadline that may apply.
  
  
• There may be tax consequences to you as a result of the short sale. For example, if your short sale involves the sale of property that is not your primary residence, you will e taxes on any "forgiven debt." Other rules apply, it is important tyou you contact a tax consultant before making your decision.
  
  
• The Watlands can help you with Short Sale information and options, please call or email if we can be of assistance.

For Buyers:

When we are talking about a short sale, we are not talking about a bank-owned property. A short sale occurs when the proceeds of a home sale will not be sufficient to fully repay your creditors. Because the creditors cannot be paid in full, the seller will need to obtain an agreement from the sellers that they will accept something less than what they are owed. While it is possible to get a good deal on the price of a short sale property, there are a number of issues unique to short sales that are worth considering:

• First and foremost, you typically need to have a lot of patience when trying to purchase via short sale. Even though you may have a signed purchase agreement with the seller, it will take some time before you know whether the transaction will close. It can easily take 3-60 days to get a lender to respond to a request for a short sale. It may take longer. And there are sometimes multiple creditors from whom approval will be needed. This can further extend the wait time.
  
  
• Many short sales are not approved. Just because you might have the highest offer for the property does not mean that it will be approved by the lender. Many purchase agreements fail because the lender chooses not to approve the short sale or because the lender grants aspproval on terms unacceptable to the seller.
  
  
• You could have expenses that are not reimbursed. For example, if you incur the costs of an inspection or an appraisal prior to creditor approval, you will typically not be able to recover those expenses.
  
  
• Unless otherwise agreed in the purchase agreement, the seller may accept offers that come in in after your offer. Just because you had the first offer that was accepted by the seller does not mean that you have a superior right to the property. All purchase agreements will typically be contingent an bank approval, and the bank will approve only one, normally the highest and best offer.
  
  
• The Watlands can help you with locating short sale properties and submitting successful offers! Call or email today.