Questions on Short Sales…..

I often run into people who ask me about short sales. So I have listed here a couple of them. This was a converstation back and forth with a potential Short Sale Seller who had some questions.

She is out of the city, up in Tampa and has a home here in Sunrise. So this is how it went.

Question: If you can give me some direction on what needs to take place for a short sale to be approved, I would appreciate it.  Do I have to be late on the payments before they will short sale it or can I put it on the market now while it is still current?

Answer: First question is, Do you own another property? We can list it now, but with a short sale you have to give your financial information to the bank. That means they will need a copy of your bank statements and your paystubs.

We need to write up a hardship letter, which means that you have to explain why you can no longer pay your mortgage. Basically you will explain you were relocated to another part of the state and you can no longer afford the home.

The whole process can take time. The one I just closed on was listed early in the year, I would say March, got a contract 2 weeks before the bank was going to foreclose on it in June.

We just closed on it 3 months later. So this will take patience. You will need to sign an Auth form which gives me the right to speak on your behalf with the bank. I will let them know that you have listed the house for sale as a short sale and that we are working to get it sold.

Once an offer comes in I send it with all the buyers info and at the same time your finances with the listing contract, bank statements, pay stubs and last 2 W2’s and the hardship letter.

I know that it seems like a lot of information, but once you sign the Auth form I take it from there. You dont have to give me that stuff now, but once the offer comes you need to be able to give it to me within a day or so. This way the faster you get it to me the faster I can send it to the bank.

If this helps you in any way or if you have any other questions let me know.

Question:  I am in the process of trying to purchase a house here now.  Will that help or hurt?

Answer: You should be able to purchase now, but you might get hit with a 1099 later on for the difference in the amount in the short sale.

Say you owe $250 and we sell it for $150, you may get hit with a 1099 for the 100,000 difference that we were short. Now I am not sure if you will get it or not. Mainly the inverstors have been getting the 1099’s, but I would suggest you check with a Tax Attorney so know for sure.
Jeannette

“This information is provided as a guide for general informational purposes only and is not intended to be tax, financial, or legal advice. It is deemed reliable but not guaranteed. Please consult with your own attorney, tax advisor and/or accountant for specific advice.”