Real Estate Short Sales

It's no secret that many home owners are going through some tough times right now and perhaps looking for solutions like a short sale. If you are like the thousands of homeowners in Orlando have fallen on hard times and you're having difficulty paying your mortgage, you will want to read this article.

If you are facing foreclosure, an Orlando short sale may be the right option for you. However, before continuing I must forewarn you, I am not a CPA, nor am I an attorney. Therefore my first recommendation is that you seek the help of both of these professionals before filing bankruptcy, applying for a short sale and well before your house is scheduled to be sold at auction. If you are facing foreclosure, you may also want to click on the following link for a free article about how to stop foreclosure.

What is a Short Sale?

A short sale in Orlando is when the lender will accept less than the full amount you owe on your mortgage when your home or property is sold. They do this to sell the home as quickly as possible and will often allow additional time for your home to sell.

Why would a lender do this? Believe it or not, the lender does not want to own your property, nor do they want to incur the costs associated with foreclosing on your home (legal fees etc.). Therefore the lender is willing to accept the short sale of your home to avoid the time and expenses pertaining to foreclosing on your home.

How do Short Sales in Orlando Work?

The first thing you should do when you can no longer afford your home is contact your lender. Again, the first thing you should do is contact your lender, and I don't mean the 21 year old debt collector that works in a call center that calls you day and night asking when you will pay the mortgage. Call the lender directly and speak to a manager or senior level person. The last thing your lender wants is to foreclose on your home. Your lender will have a department that works with people like yourself that are behind on payments so they can offer a solution to your situation. If you feel you are going to be able to catch up, contact me and I'll offer you a few solutions on what you can do. If you don't think you are going to be able to catch up on your mortgage and can't resolve the late payment issue with your lender, then you may want to see if they are willing to accept a short sale on your home. If you need help on this, again contact me and I will work with you to arrange a short sale if it is possible.

Your lender may require you to submit some additional information before they will consider a short sale on your home. The reason for this is they want to ensure that you are no longer in a position to pay the mortgage as per your agreement with them. This information may include:

• W2's and or pay stubs to verify your income;
  
• Bank statements to verify your assets;
  
• They will require a letter of hardship – this is a letter describing to your lender the reasons why you are in this position financially and will include your request for your lender to accept a short sale on your home. When I say hardship letter, your letter should be just that. You need to make your letter sound as sad as possible and include as much documentary evidence as possible to back up your story. Example, you may want to include any medical bills you have recently incurred.
  
• The lender will want to know what the fair market value of your home is. They will either use a realtor to do a BPO (broker price opinion) or go with a full appraisal from a licensed appraiser.
  
• If your home is currently listed with a real estate agent, the bank may also want to see a copy of your existing listing agreement.
  
• Preliminary proceeds sheet from the sale of the property. This will show the proceeds of the sale of the property after your mortgage is paid off and all other closing costs and fees are paid out. Obviously this will be negative with a short sale.

There is no guarantee that your lender approve your short sale, but it certainly may be worthwhile attempting. The short sale will not show a foreclosure on your credit record (check with your attorney about this). If your bank does not approve a short sale on your home, they will continue with the foreclosure proceedings. However, if your lender does agree, they will be responsible for any losses as a result of the sale - though check with your CPA regarding taxation issues and how this may affect you. There has been some recent changes in legislation that benefit you the homeowner as far as taxation goes.

So, does a short sale mean you are off the hook entirely?

The correct answer is, it depends. The lender still has options to try and collect this shortage. The lender may try and have you sign a promissory note to repay the shortage (don't sign anything until you have consulted with your attorney). They may also try and file a collection or a judgment for the difference in the short sale. Again, consult an attorney and you may be able to avoid all of these issues.

The lender may also try and issue you with a 1099 for taxes for  income in the amount of the difference in what is owed on your home and what your home was sold for. The IRS will then in turn try and collect taxes on this amount as income. Again, contact both an attorney and a CPA on this one. There has been some recent changes in law that may help you avoid these taxation issues without having to file for bankruptcy. This legislation was released as a result of the high incidence of foreclosures we are currently experiencing in the US.

If you are facing foreclosure, please contact me. I am here to help you and can either point you in the right direction of a CPA/Attorney or can provide you with some reports that will assist you with making an educated decision that may either save your house or save your from making uninformed mistakes. I can't guarantee that I will take on you as a client for a short sale, but I am certainly willing to try and assist with pointing you in the right direction.

I may be contacted directly at (407) 346-5331.

Sincerely,

Chantal Gakwaya.

Your Orlando short sale specialist.