What is a Short Sale?
Simply put, a
short sale is a sales transaction in which the seller's mortgage
lender agrees to accept a payoff of less than the balance due on the
following terms have become common in everyday conversations:
"I'm upside down"
"my home is
In both cases, your home
is not worth what you currently owe to the bank for your mortgage
loan. There are many reasons why this happened, but the most
common is due to the fact that market conditions deteriorated due to
a meltdown of the financial markets in late 2008 and real estate
values began to fall as unemployment began to soar. It was
(unfortunately) the "perfect storm" and we're still feeling the
effects of it today and it will take several years for the overall
economy to recover from this one!
The Short Sale Process and YOU
If you happen to be
"upside down" or "underwater" on your mortgage and you have, your
banks *may* grant a short sale for two reasons: the seller has a
hardship and the seller owes more on the mortgage than the
home is worth. The most common hardship examples include:
As a seller,
you will need to prepare a short-sale package for submission to your
bank/lender. Each bank/lender has its own guidelines, but the basic
procedures are pretty similar from bank to bank. A short-sale
package will most likely consist of:
Authorization (which allows me or my transaction manager speak to the
Preliminary Net Sheet
Hardship Letter - (this is critical to getting
a short-sale approved by your lender)
2 Years of
2 Years of
Months of Bank Statements
Market Analysis (CMA) with a list of recent comparable sales in your
At this point,
the process is not unlike a traditional sale - I will work with you to
establish a listing price based upon current market conditions and we'll
inform other agents (via the MLS) that this is a short sale - pending bank
approval. We solicit an offer, submit it to the bank and and wait
for an answer. It can be several weeks to several months depending
how backlogged they are. We work with an established and credible
short-sale transaction management firm (RealtyTMS) who persistently
handles all of the communications in a systematic pursuit of a short sale
payoff agreement (approval). As of February 2011, the average short
sale approval is running approximately four months.
I can't stress
enough that patience is essential for you and the buyer.
Potential Tax Consequences
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.
I am not an attorney or CPA so can not give legal or tax advice, so be
aware that there may be potential tax consequences, so it’s always best to
seek professional guidance in these areas as needed.
Don't be overwhelmed or confused. Selling your home or condo via
short sale is a better
alternative to foreclosure. Call Anthony Rael - your Denver
Short Sale Expert!
purchasing a short sale property?
I'll be happy to send
you lists of short sale and/or bank-owned (foreclosed) properties
throughout the Denver metro area. Call Anthony Rael, Denver Realtor®
Short Sale Expert at (303) 520-3179.
The Short Sale Process with the BANK
In most cases, buyers should expect to wait anywhere from 30 days to
several months to get a response from the bank. Our transaction
management partner (RealtyTMS) will communicate WEEKLY with the bank and
keep all parties (seller, listing agent, buyer, buyer's agent) updated on
the process. Some buyers get tired of waiting for short sale
approval and may threaten to cancel if they don't get an answer within a
specified time period. Unfortunately, there's nothing ANYONE can do.
If you're easily frustrated or very inpatient, pursuing a short sale is
probably not a good idea for you
short sale services are
backed by a 100% satisfaction guarantee! For
expert real estate advice & counseling,
Denver REALTOR® with
REMAX Alliance at (303) 520-3179. You can also
follow Anthony Rael on Facebook!
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Anthony "Mike" Rael |
5440 Ward Rd., #110 |
Colorado 80002 | 303.520.3179 | 'Call
Licensed Colorado Real Estate Agent
| Certified Negotiation Expert (CNE) | Seniors
Real Estate Specialist (SRES)
REMAX | RE/MAX,
LLC | RE/MAX
Rocky Mountain | RE/MAX