Short selling your home is a very tricky and complicated process. It takes much longer and requires quite a bit more effort from you and your Realtor alike. If you are in a financial hardship and are considering a short sale for your home, some of these quick questions might help. The biggest piece advise I can pass along to you regarding a short sale and your home though; find a Realtor whom specializes in short sales and has closed several of them already. So often, we find that lack of knowledge on the Realtor’s behalf can really hinder and even prevent these short sale deals from being approved and closing. Make sure that you do your homework and understand the process, then find an experienced short sale specialist in your area that you can trust.
What is a Short Sale?
This is a fairly loaded question, and the short sale is thought to be the most complicated type of real estate transaction regularly practiced. So let’s keep the answer simple for now. In a short sale the owner’s lender is agreeing to a sales price for less than what the owner owes on the property. This could include your mortgage, HOA dues, liens, judgments, home equity accounts, and really anything that has been tied to your property as a debt through the county. When you sell your home, you are required to give the buyer a title to the home that is cleared and free of ANY debt in your name. Sometimes these debts can add up to a higher amount than what your home is currently worth. This would be a short sale.
How Much Will Short Selling My Home Cost Me?
This is a question that we have very regularly asked as one of the Denver area’s leading short sale real estate specialists, and people want to know! The answer is generally, no. The majority of short sale do not actually cost the seller anything. Of course, there are exceptions and extenuating circumstances to all rules but collectively it shouldn’t cost you a dime.
How Do I Qualify for a Short Sale?
There are a number of determining factors in qualifying and receiving an approval to apply for the short sale of your home. Some of them include but are not limited to: being delinquent on your payments, suffering a financial hardship like job loss or divorce, and disability or retirement.
How Will a Short Sale Effect My Taxes?
When you short sell your home, you should be issued something called a 1099-C, which is the IRS form to designate a cancellation of debt. Generally speaking, you should not have to pay taxes for this if it was your primary residence. We might be able to answer some general questions regarding any tax implications, but for the sure fire answer we suggest you contact an account or the IRS.
How Will a Short Sale Effect My Credit?
Yes, and more likely than not your credit has already been effected by your situation. Once your mortgage payment becomes more than 30 days late, your lender will likely report this to the credit bureaus and continue to do so throughout the entirety of the process. The short sale itself effects your credit in the sense that the debt, or mortgage, will be reported as “settled” or “paid for less than full amount” instead of paid in full. This does have a negative impact on your credit, but it is far less than that of a foreclosure which is the bank taking possession of the home without any sale or compensation for your mortgage.
How Long Do Short Sales Take?
A typical short sale should take approximately 6 to 9 months here in Colorado. Each state has a slightly different policy and program but these numbers shouldn’t vary much more than a few months state to state. We have closed hundreds of short sales in the last few years and have had some drag on for over 24 months, but these are crazy circumstances and not generally the norm what so ever. Again, there are always exceptions to the average short sale and we cannot guarantee anyone that their home will close on or before a certain date. We are at your lender’s mercy with time frames and deadlines.
Tatyana Sturm and The Storck Team have been honored to serve the Denver and surrounding areas in relocation real estate for the last 10 years as one of Denver’s leading short sale specialists. If you or someone you know is facing foreclosure, make sure you are educated on your options. You might have equity or money in your home that you are unaware of in this ever changing real estate market. Call or text The Storck Team at (720) 350-5909.