7 Tips for Short Sale Success – Information Plus Short Video | Sun Valley Real Estate

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By: G. M. Filisko

Have to sell your home for less than it’s worth? Our seven tips will help you get the best price.

There are five important steps to consider if you are faced with a short sale.

When you owe more on your home than it’s worth, but you have to sell, you need to squeeze every dollar possible from the sale. Here are seven tips for navigating the short-sale process.

A short sale has to be approved by any company that has a mortgage or lien against your home. That includes your first, second, or even third mortgage lender, your home equity line lender; your homeowners or condominium association; and any contractors who’ve placed a lien on your home. Make a list and start talking to everyone early in the process. Ask what documents they’ll need from you.

You’ll need to work with a team of short sale experts, including a real estate agent, real estate attorney, and your accountant. Look for agents and attorneys who advertise themselves as short sale experts. Interview at least three, and listen carefully for signs that they understand the complexities of the short sale process.

Agents should explain how they’ll arrive at a suggested price for your home. Ask them to show you a sample short-sale package or for an example of a prior short-sale success.

Gather the paperwork your crs and mortgage lenders asked to

see, like your listing agreement and a hardship letter explaining why

you need to do a short sale. You’ll also need proof of what you earn and

what you owe as well as copies of your federal income tax returns for

the past two years.

Despite a federal rule saying banks participating in the federal government’s

must respond to short-sale offers within 10 days, it may take weeks or

months for your lender to decide whether to allow you to sell your home

in a short sale—and even longer if you must negotiate with more than one

lender or lienholder.

Your lender and lienholders don’t have to agree to your proposed

short sale. They can reject your terms or make a counteroffer, which can

create further delays.

Discuss with your short-sale team how you should respond to common

short-sale demands from lenders. For example, are you willing to sign a

promissory note agreeing to pay outstanding amounts after the sale is

complete?

Any unpaid amount of your mortgage “forgiven” by your lender through a

short sale may be considered income to you under federal tax rules. Ask

your attorney or accountant whether you qualify to exclude that amount

as income on your tax returns under the . Also ask if you’ll be required to report

amounts “forgiven” by other lienholders, if applicable.

Ask whether your lender will report the short sale to

credit-reporting agencies. Having a portion of your debt forgiven may

negatively affect your credit score, but a short sale typically damages

your score less than a foreclosure or bankruptcy.

Ask you lawyer whether you’ll be responsible for paying back the

lenders’ loss. If the lender says it will forgive any losses on the sale

of your home, get that promise in writing.

This

article includes general information about tax laws and consequences,

but isn’t intended to be relied upon by readers as tax or legal advice

applicable to particular transactions or circumstances. Consult a tax

professional for such advice; tax laws may vary by jurisdiction.

G.M. Filisko is an attorney and award-winning writer. A frequent

contributor to many national publications including Bankrate.com,

REALTOR® Magazine, and the American Bar Association Journal, she

specializes in real estate, business, personal finance, and legal

topics.

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