Do you have any short sales? The question arises more frequently each month as the consumer reads a little and knows a lot. What is a short sale? A short sale is when the lender will accept less than the full amount owed (selling short) on a mortgage when the property is sold. The lender may accept the short sale to avoid the time and expense of a foreclosure. It also can be in the best interest of the borrower. Not great for the borrower’s credit but neither is a foreclosure. They will not have to endure the time and stress of a foreclosure and their credit may not be as damaged as it would with a foreclosure. It is quicker, easier and doesn’t open up the borrower to the embarrassment of a foreclosure. The last thing the lender wants is to foreclose so if you’re an owner in financial crisis, contact your lender and ask for the short sale department. Explain your situation and ask for their assistance. Get ready for a lot of requested documents such as W2’s, pay check stubs to verify income, bank statements to verify assets, a hardship letter describing why your in this distressed financial position and asking for their acceptance of a short sale, Fair market value (CMA) of property, estimated proceeds net sheet from the sale (see net shortage to reflect a short sale amount) and finally the listing and purchase agreement (when available). When the lender reviews all of your info, it’s their discretion whether or not to approve the short sale. If they don’t approve the short sale, they will then proceed with the foreclosure. If they do agree to the short sale you will close on the sale of your property and the lender takes their loss.
Am I then off the hook? Not really. The lender may easily try to collect their shortage. As a condition to the short sale, the bank may require a letter stating the buyer must repay the shortage. This lender may also file a collection or judgment for the amount of shortage. You may also be liable with the IRS for income taxes on the loss. Seek your accountant and attorney for specifics.
So do you have any short sale deals in Miami Beach and any other oceanfront communities like Sunny Isles oceanfront? The short sales are in fact more common than in 2006 but in Miami Beach, Sunny Isles real estate and South Beach we find they are few and far between and not that great of a “deal” as many would imagine. Where the Miami Beach and Sunny Isles deals are found is with the bank owned (REOs) and motivated sellers with ample equity. With bank’s on the verge of a new paradigm shift, I do believe they will soon be more open to a major shortage but at this point, the banks are not always letting it go for a “good deal or a great steal”. If you’ve negotiated the best deal you thought possible on a short sale and think your getting the steal, watch out for your valuable time being lost as the weeks go by waiting for an answer. Banks take time to approve them and you may just get a NO when you could have bought other deals that past you by. Contact me for more information of if you think you need to get your home sold quickly through a short sale.