20 - TCnbc Magazine
20 - TCnbc Magazine
It is possible the seller can sell the home and still owe the unpaid difference, plus interest and penalties, to the lender (the “deficiency”). The lender may then seek a deficiency judgment against the seller for this difference. If the judgment is issued by a court, it could be in effect for up to 20 years if not paid sooner. This is one of the most fundamental issues that sellers must address in considering
whether to sell property as a short sale.
Simply “walking away” from the property through foreclosure also does not necessarily relieve a seller of these debts. A homeowner could lose their property to foreclosure generally to the 1st mortgage lien holder and still owe the balance(s) from the 2nd mortgage or other lien holders.
A short sale is a very complex transaction that involves numerous issues as well as legal and financial risks. All sellers are advised to seek the advice of a lawyer and tax professional before proceeding with a short sale.
A short sale is a real estate transaction in which the sales price is insufficient to pay the debt(s) and obligations encumbering the property along with the costs of sale, and the seller is unable to pay the difference.
When you are the seller
Most short sale transactions are handled by real estate agents who specialize in short sales. There are 4 essential ingredients to a short sale; however, strategic short sales, those without a hardship, are also possible. What makes a short sale work are the following:
• An underwater home
• A willing short sale bank
• A seller with a hardship
• A buyer willing to purchase
the home
Every short sale is dependent upon the seller’s lender(s) consenting to the transaction and agreeing to release the lender’s security interest in exchange for less than what is owed. In some cases however, the lender’s approval of a short sale does not necessarily mean the lender relieves the seller of liability for repayment of the entire debt.
When you are the buyer
Sometimes short sale properties go at bargain prices, however most short sales are listed at 'market value'. Prior to going on the market, the lender will call for BPO's (Broker Price Opinion) from several agents. Land value, age, condition and repairs are taken into consideration, so if you think you have found a 'deal', stop and consider what you are NOT seeing!
Short sales are listed 'As-Is', which means that the seller (the lender) is not prepared to affect any repairs to the property. You are buying it AS IT IS! The difference between a short sale and a traditional sale, might be the cost to put right what you CAN'T see (plumbing, electrical, roof, mold etc), so when buying a short sale, ALWAYS have it inspected before submitting your offer.
In addition, if the short sale is being handle by an attorney, you could end up paying an additional 3% in processing (legal) fees.
ALWAYS DEAL WITH A REPUTABLE AGENT!
What Is A Short Sale?