What is a Short Sale?

A short sale, negotiated settlement, or short pay occurs when a lender agrees to accept less than the amount owed to payoff a home loan as an alternative to foreclosure. The lender usually agrees to a short sale because they know if they take the property back through foreclosure they are going to take a much larger loss.

How does Debbie or First Team get paid?
We will negotiate directly with the bank for all real estate agent commissions. In most cases, the bank will offer the listing agent a smaller than average fee for performing the marketing and negotiation responsibilities associated with representing a seller.

How Long Will it Take?
The short sale negotiation process is a lengthy one. These transactions really should be called "long sales" instead of "short sales"! It may take several weeks to months before a lender agrees on acceptable terms. Many lenders have layers of bureaucracy, insurers and investors that we will have to maneuver through in order to get your short sale approved. I'll keep you informed of the progress throughout the entire transaction.

But My House Is Going to Foreclosure, Will I have Enough Time?
Starting a short sale will not automatically stop the lender from starting the foreclosure process. However, we have successfully convinced lenders to postpone a foreclosure while we negotiate a short sale. While there are no guarantees, we will doing everything that we can to get your home sold before the lender follows through with their foreclosure and we are successful most of the time.

Can I Stay in the House?
The purpose of a short sale is to get the property sold. So, you will be moving eventually. This is not a program that can stop a foreclosure and allow you to keep the house indefinitely. It is a lengthy process and you can stay in the home until the sale is complete, sometimes for up to a year or more, but often not that long..

Will This Have Any Impact on my Taxes?
On December 20th, 2007, President Bush passed “The Mortgage Forgiveness Debt Relief Act of 2007” which allows California Homeowners a (3) year window to avoid paying taxes on the loss the lender takes. Before this act took affect, “If the value of your house declined, and your bank or lender forgave a portion of your mortgage, the tax code treated the amount forgiven as income that can be taxed.” According to "The Mortgage Forgiveness Debt Relief Act of 2007" if you sell your home as a short sale by December 20th, 2010, the loss the lender takes will not be considered taxable income by the IRS.
The IRS often gets involved with short sales because they are seen as a relief of debt and may be treated as income. Please check with your CPA and let them know about "The Mortgage Forgiveness Debt Relief Act of 2007."

What type of paperwork do I need?
The lender will require a view of the financial package that usually includes:
2 months' bank statements
2 months' pay stubs
2 years' IRS tax returns

Read more at InnovativeShortSales.com