I am continuing with short sales in many of my blogs due to the continuing confusion about them completely understandable. There seems to be so much misinformation floating around about them. Not to mention the amount of calls and emails I receive from both buyers and sellers wanting information. They usually begin with I heard from my friend or read some where about x, is that true?
Even though both sides of the transaction feels the pain of the whole thing, there are very different things to consider if you are a seller vs. a buyer. Below is a basic outline of what I typically cover with a seller when we sit down the first time to discuss the selling process. The one thing you always want to keep in mind is every transaction is different and there are many unknowns that come up. That is something you can't control no matter how prepared you are. An experienced agent will be very helpful in that regard. Again I can't stress enough how important it is to speak with an attorney and tax accountant before making a decision to short sale your home. Every states laws are different and you need to know where you stand.
A short sale occurs when the proceeds of your home sale will not be sufficient to fully repay your creditors. Because of this, it will be necessary to come to an agreement with your creditors to accept less than the full amount of the debt you owe in order to release the liens on your property. Without this agreement, your home cannot be sold (unless you are able to bring money to the closing). If you are facing foreclosure, the decision to proceed with a short sale or to allow the property to be foreclosed is a difficult one. You should consult with an attorney or tax advisor before making your decision. There are also several nonprofit organizations that may be able to help with this decision.
Should you choose to pursue a short sale, there are a number of issues to keep in mind:
Your creditor will likely communicate with you by mail to indicate whether it will accept less than it is owed. If the creditor approves, the creditor will agree to release the liens on the property. But you should also determine whether the creditor intends to waive its rights to any shortfall, or whether it intends to pursue you for the shortfall after closing. If the communication regarding this issue is at all unclear, it is very important that you contact the lender for clarification before continuing with the sale.
If you are in the process of foreclosure, it is important to understand that the process will continue even though you are pursuing a short sale. Typically, a foreclosing lender will not delay the foreclosure process because you have the property on the market or even if you have a purchase agreement signed. Therefore, you need to stay informed about your foreclosure process, and in particular understand the redemption period deadline that may apply.
There may be tax consequence to you as a result of the short sale. For example, if your short sale involves the sale of property that is not your primary residence, you will be taxed on any “forgiven” debt. Other rules apply; it is important that you contact a tax consultant before making your decision.
In Minnesota we have a longer redemption period than many states which can work in the favor of both the sellers as well as the buyers. It can take a long to get all of this sorted out, so know as much about the process going it. Believe it or not the more you know of your situation the easier it will be to make the right decision for you. Don't just jump into it without all the facts, the process is hard enough on a family already. By doing the research first it should ease the burden a bit.
As always please consult a real estate attorney with any legal questions you may have and your accountant for any tax questions.
Follow me on facebook - Tom Sommers Edina Realty Twitter - usearealtor
or any of my Web Sites:
www.tomsommers.com
www.allmnhomes.com
www.tomsommers.edinarealty.com
No comments:
Post a Comment