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Short Sales from a Seller's and Buyer's perspective

 


National Association of Realtors map from December 2016

 

If you received a notice of foreclosure, are contemplating a short sale, or have questions on loanThe Bakers are Short Sale Experts
modifications, don't panic, call the Bakers.

 

As an experienced agent and Equator-certified specialist, Bill Baker has the experience to help you through this difficult and emotional process.  All conversations are confidential.

 

The Bakers have helped both buyers and sellers navigate the short sale process. 

 

A seller asks:  I was reading online that if the short sale goes through, we can be held responsible for the difference between what we owe and what the house sells for.  Is this generally the case?

We'll help you with the short sale process, pre-qualify you, and if you are  approved, the primary lender will forgive the debt.  If there was a second or HELOC on the property, then that needs to be negotiated prior to the closing of the property.


That leaves three concerns. The IRS (which had the right to add the forgiven debt to you as taxable income), the HELOC, if any, and the MIP/PMI company, if any.  Below is the IRS Mortgage Forgiveness Debt Relief and Debt Cancellation Act.  Note this runs through 2014.  The IRS does not add the forgiven debt to your income if it is a primary residence. That is great news. The property must close in 2013.

 

If you have a second mortgage such as an equity line of credit (HELOC) or a 80-10-10 or 80-20, the situation is more complicated.  Seconds must be negotiated upfront in the short sale process.  In almost all cases, this is negotiated before closing in the form of a seller/buyer contribution.  So far we haven't heard of the PMI companies chasing buyers on a primary residence after a short sale.  In most cases, they write it off their books.  But be aware that they retain the right to pursue at a later date if this is not negotiated upfront.

 

Our short sale attorney tells us that that the MIP companies are going after the lenders, looking for misrepresentation (fraud) in the loan documentation process.  Obviously, the lenders have deep pockets and their chance at getting money out of them is much better than with the individual homeowner.

 

If a declared bankruptcy is on the horizon or has already happened, a short sale is still possible; however, it becomes much more complicated.  Contact the Bakers for more info at 847-927-2728.


 

 

 


  

 

    BUYING A SHORT SALE
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 Short sales are transactions that take place between a buyer, seller, and seller's lender.  The seller's lender agrees to take  
 less than it is owed because the proceeds of the sale are not enough to pay off the entire amount owed the bank.


Many short sales are never completed by the lender and after months of trying, all parties give up. MIP, junior liens, hardship, lien holder experience, and many other variables come into play. We run a property through our short sale checklist before suggesting you write an offer to see if it looks like a viable short sale.  There is no point waiting around tied up for months with a contract to see if the process can even be completed.

 

The Bakers have extensive experience in short sales and can help both sellers and buyers with the process. Contact the Bakers if you are interested in this type of sale and need professional representation. You will need an experienced lawyer as well.

 


Below is from IRS publication 4681. Note IL is a recourse state