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7 Tips for Short Sale Success
When you owe more on your home than its worth, but you have to sell, you need to squeeze every dollar possible from the sale. Here are seven tips for navigating the short-sale process. 1. Know who you owe A short sale has to be approved by any company that has a mortgage or lien against your home. That includes your first, second, or even third mortgage lender, your home equity line lender; your homeowners or condominium association; and any contractors who've placed a lien on your home. Make a list and start talking to everyone early in the process. Ask what documents they'll need from you. 2. Pick your short sale team You'll need to work with a team of short sale experts, including a real estate agent, real estate attorney, and your accountant. Look for agents and attorneys who advertise themselves as short sale experts. Interview at least three, and listen carefully for signs that they understand the complexities of the short sale process. At Ruhl&Ruhl REALTORS we have many agents that are experienced and trained in the short sale process, if you need any help understanding the short sale process please contact Ruhl&Ruhl. A real estate agent will explain how they arrived at a suggested price for your home. Ask them to show you a sample short-sale package or for an example of a prior short-sale success. 3. Get your documents ready Gather the paperwork your creditors and mortgage lenders asked to see, like your listing agreement and a hardship letter explaining why you need to do a short sale. You'll also need proof of what you earn and what you owe as well as copies of your federal income tax returns for the past two years. 4. Expect delays Despite a federal rule saying banks participating in the federal government's Making Home Affordable loan modification program must respond to short-sale offers within 10 days, it may take weeks or months for your lender to decide whether to allow you to sell your home in a short sale-and even longer if you must negotiate with more than one lender or lienholder. Your lender and lienholders don't have to agree to your proposed short sale. They can reject your terms or make a counteroffer, which can create further delays. A trained real estate professional will help you anticipate these delays and can give you advice if your lender does reject the short sale or counteroffers. 5. Anticipate demands Discuss with your short-sale team how you should respond to common short-sale demands from lenders. For example, are you willing to sign a promissory note agreeing to pay outstanding amounts after the sale is complete? 6. Know the tax implications Any unpaid amount of your mortgage "forgiven" by your lender through a short sale may be considered income to you under federal tax rules. Ask your attorney or accountant whether you qualify to exclude that amount as income on your tax returns under the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act. Also ask if you'll be required to report amounts "forgiven" by other lienholders, if applicable. 7. Consider how the short sale will affect your credit and what you must pay Ask whether your lender will report the short sale to credit-reporting agencies. Having a portion of your debt forgiven may negatively affect your credit score, but a short sale typically damages your score less than a foreclosure or bankruptcy. Ask you lawyer whether you'll be responsible for paying back the lenders' loss. If the lender says it will forgive any losses on the sale of your home, get that promise in writing. Many families across the US are exploring the short sale option; you are not the only one. Ruhl&Ruhl REALTORS is here to help in any way to make the process as easy and convenient for our families as possible. If you would like the help of an experienced and trained Ruhl&Ruhl agent please contact us through our Customer Service department, toll free at 866.441.1776 or visit us on our webpage at RuhlHomes.com
