Short Sales

The short answer is that Yes - We can help you with your short sale.

Frequently Asked Questions from Homeowners/Sellers About Short Sales in the Scottsdale Arizona Metro Area

What is a Short Sale?

A short sale is a real estate transaction in which the sales price is insufficient to pay the liens encumbering the property and sale costs, but the seller is unable or unwilling to pay the fifference.  
(AKA "Short Sale").

Would I qualify for a Short Sale?

There are 2 main qualifications for a good Short Sale candidate…

1. A short sale candidate is a homeowner who is behind on their mortgage payment and is unable to keep up with all of their monthly obligations. Some of the reasons for falling behind on their mortgage payment may include sudden change in monthly household income, loss of job, divorce, and more.
2. A short sale candidate also has no equity in their home. They are not able to sell their home and pay off all of the outstanding loans that are secured against their property.

In some cases there may be help available by way of the new stimulus plan.  To see if your eligible check out the government site “Making Your Home Affordable” and take a self assessment to see if you may be one of the 7 to 9 million homeowners eligible for help from your lender.

Get the help you need, find a HUD approved housing counselor, contact info for your mortgage servicer, eligibility questions, foreclosure rescue scam information and more.  To see where you stand go to the government site at Making Your Home Affordable.

If the above government program is not a fit for you then continue reading.

How do I select the right team to successfully manage and negotiate my Short Sale?

Before hiring just any REALTOR® to assist you in a Short Sale, make sure they are qualified and understand all the work that is required to see you through to the end. A properly trained Short Sale Agent knows how to qualify you for a Short Sale transaction and therefore has a very high success rate. Most real estate agents, and investors do not understand how to qualify you and your lender for a Short Sale transaction. This is one of the reasons they often have such low success rates when it comes to closing a short sale. Investors have around a 10% success rate. Most other so called 'Real Estate Experts' don't do much better.

Be smart and make sure that you ask many questions before trusting your future, your credit and your financial situation with a self-proclaimed 'Expert' that may have just learned about short sales from a title, escrow company, or a Real Estate Seminar.

Do you work with all banks?

Yes, we are currently working with all banks.

How long does it take to do a Short Sale?

There are several stages that are involved with the Short Sale process...

• The first stage requires working with you as the homeowner to get all of the required documentation that your bank will require us to send them. This stage shouldn’t take longer than a couple of days.  Some of the things they will likely require are:
  
  • Full disclosure of your current financial situation.
  • Hardship letter.
  • Last 2 pay stubs for all working borrowers
  • Last 2 years tax returns.
  • Last 2 bank statements. 
  • Authorization to disclose personal information
  • We will need a letter from you that says we are able to talk to the bank on your behalf.

The lender will likely require additional information, which we will collect from you, and review before submitting it to the lender. It is very important that you not make contact with the lender from here forward to discuss your loan. Should they contact you, please inform them that we will be handling all negotiations, and that you would prefer they not contact you any further.

• The second stage involves us preparing the listing paperwork and scheduling an appointment with you to see your home and prepare your home to be listed for sale. This stage only takes a few days as well.
• The third stage entails us aggressively marketing your home for sale and producing a willing, ready, and able buyer. This stage can take as little as a few days or as long as a few months. On average we receive offers on our listings within 3-6 weeks.
• The fourth stage is the actual presentation of the offer to your bank. This is where our expertise and experience in negotiating Short Sales takes place. The actual negotiation/approval process can take as little as 2 weeks or as much as 3 months. On average most Short Sales take between 30-60 days from the date the offer is presented to the lender to the date of the Short Sale approval. In most cases, 60-90 phone calls and faxes back and forth between the lender and our team are required. The process is usually not described as "fast" in most cases, but with the right team working on your behalf, you can be at rest knowing that everything is being handled diligently and with much care.
• The fifth and last stage to the Short Sale process is the period of time between Short Sale approval from the bank and the buyer closing on the home. We prepare all of the buyers that we work with to be ready to close in as quickly as 3 weeks from the time of Short Sale approval. Often buyer’s will even close in as little as 10-14 days.

What if I don’t have money to pay the Realtor commissions?

While there is a small up front fee for our out of pocket marketing and negotiation expenses, you as the seller do not have pay the REALTOR® commissions.

Are there any tax ramifications to a Short Sale?

You may have heard, "Don't do a short sale because you will get a 1099 and have to pay taxes on the difference between what you owed on your home and what you sold it for or the amount the bank wrote off." This is true, but this is not the whole story…

If you do a Short Sale you will receive a 1099 from your bank. This 1099 will be called a "1099-C." The thing that most people don't know or don't tell you is that with a Foreclosure, you will also get a 1099. In the case of a Foreclosure the 1099 is called a "1099-A."

So what's the difference between a 1099-C and a 1099-A? The 'C' stands for "Cancellation of Debt" and the 'A' stands for "Acquisition or Abandonment of Secured Property". The differences are that you get the 'C' with a Short Sale and the 'A' with a Foreclosure. It is important to know that while there are many differences, the tax consequences for the 'C' and the 'A' are the same. You may not even be required to pay taxes on the 'income' as shown on the 1099-C, but don't just assume that you won't have to pay. Before making your final decision, first consult your CPA or Tax Preparer. While we are very good at successfully closing Short Sales, we are not tax experts. Please, consult a professional CPA or Tax Preparer before beginning the Short Sale process.

One more thing you should know is that in approximately 99% of the cases, the amount of the loss at Foreclosure is greater than that of a Short Sale. If you are going to receive a 1099 in either case, it is in your best interest to do a short sale instead of allowing your property to be sold for less at Foreclosure or as an REO (Real Estate Owned or Bank Owned Property). Now that you know this, don't allow rumors and incorrect information to influence an important decision in your life. Losing your home to Foreclosure is always the last resort and you should seriously look at all of your options before letting your home go to Foreclosure.

Are there any credit consequences to a Short Sale?

This question is asked very frequently and has many different variables involved. The first thing to keep in mind is that the moment you go 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureau’s that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit. After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reporting on their credit report.

When the actual Short Sale is completed, most banks will report to your credit report that your account was "paid in full for less than the full amount." Your credit report may also be marked as "settled." It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to Foreclosure you would most often see the bank report "Foreclosure" on your credit report.

It is difficult to Gage how much of a credit scoring affect a Short Sale has vs. a Foreclosure. Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse. We strongly advise you to work with a Credit and Credit Scoring Expert for more specifics on this topic, and ways in which to improve your credit after the Short Sale is complete.

Why exactly would a bank agree to a Short Sale?

It's more cost effective for a bank to do a Short Sale versus a Foreclose on a home. Banks are not interested in owning real estate. Banks make their money from receiving monthly mortgage payments. While banks will take a loss doing a Short Sale, they can often minimize their loss by as much as 10-20% over a Foreclosure.

Can the bank sue me or place a judgment against me for the difference between what I owe and what the home sells for?

This is a good question that is best answered by a qualified Real Estate Attorney. What you should know is that Arizona is what most people refer to as a "Non-Judgment Deficiency" state. What this means is that generally speaking if the bank forecloses on your home, they cannot pursue you for a deficiency judgment. For more specifics on this topic, please refer to the Arizona Revised Statutes and consult a qualified Real Estate Attorney.  This is currently being tested in the apellet court.