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What Is A Short Sale? A short sale is a situation where a lender agrees to accept less than what is owed as payment in full (in most situations). This can save both the seller and the lender from the costly foreclosure process. There still will be repurcussions for the seller's credit, but it is not considered as damaging as a foreclosure would be.
Who qualifies? One must be able to prove that the financial difficulty one is experiencing in keeping their mortgage payments current is ongoing and permanent. Furthermore, the current market value of the home must be LESS than what is owed (considered "upside down").
How do I do it? A qualified Realtor who understands the process can guide you through it. Do be careful in this process because there can be a lot of pitfalls and ramifications involved. (Including tax issues.) It is VERY important that you understand the risks and procedures thoroughly.
Are there other options? Yes! The sooner you notify your Realtor and your lender of difficulties you are facing in affording your home, the more options you generally have. Remember, nobody wants a foreclosure. Not the lender (a typical foreclosure costs them around $50,000) and definitely not you. The key here really is to not wait until it is too late to ask for help. Many times you can find a way to keep your home. Are there repurcussions for going through a short sale? Yes. There are some situations where a lender can still try to recover their losses in court by obtaining a defeciency judgement against you. Generally, if you have to short sale a home on 2 acres or less and it is a single family home or duplex this would not apply under current Arizona law. Additionally, the current federal laws make it so you will be taxed on the forgiven debt as income with a 1099 furnished by your lender. There also may be credit repurcussions on your credit report, although they are generally milder than a foreclosure would be. MOST IMPORTANTLY, if you did not tell the truth on your original loan application with your lender IN ANY WAY (which is fraud and a felony) do not try to ask for a short sale because this can have serious repurcussions for you and any real estate agent trying to assist you. If this last criteria applies to you, then you are not a candidate for a short sale. Need more information? Or need help figuring out your options? Contact Me. I am always happy to help. (Confidentiality guaranteed.)
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