If you are considering a short sale and have a home that is in need of repairs you still may be able to get the bank to work a deal with you. If you start the process with your bank work and work with your Realtor to get a pre-approval for the short sale you will have a shot. Initiate the contact with your bank and tell them you are interested in doing a short sale and that you have already chosen a Real Estate Agent. The bank will initiate contact with the realtor and get the paper work in order that is necessary to do the short sale. Sign everything and return it as soon as possible.
Your agent will then be contacted by the bank in order to set up an appraisal of the property. The bank in essence will be telling you the listing price. If you have approved already you have cleared a major hurdle. It really doesn't matter what the appraisal comes in for because the bank is already agreeing to work with you to the best of their ability and to forgive a portion of your loan. You will not know how much until the final closing but if you get through the appraisal process and get a willing buyer at market value it is likely you will be getting a significant reduction in your balance owed.
1. The bank can forgive the entire difference and push the sale through.
2. The bank can forgive the entire difference and offer you cash relocation assistance.
3. The bank can forgive a portion of the difference and work out a payment plan for you to a portion of the difference between the sales price and the loan amount.
4. The bank can forgive a portion of the difference and agree to push sale through if you pay one lump sum at time of closing. This could be $1000, $5000 or any amount. It is called "seller participation" and it can be seen as the cost of getting your mortgage reduced by a significant amount. It really just amounts to a fee for getting to unload your underwater home. This is not the most common outcome.
5. The bank can deny the short sale based on the type of loan, number of investors for the loan or lack of reasonable hardship on the part of the seller. They probably can deny the short sale just because the negotiator has a bad day, but for the most part once you get this far into the process, everyone seems to be working toward a common goal. The goal being to get you out from under your mortgage and get someone else into the home at a lower price with accurate paperwork and records. This may not be the common goal to the current homeowner but if the situation has come about that the short sale is the best possible outcome, then it is to the benefit of everyone involved.
It is unfortunate that it has come to this in our real estate market but the reality has to be addresses and it is a sad but true fact that some of these home in Las Vegas will never be equal to the value of their current mortgage. It is a shame and it can be a recipe for hopelessness but the short sale gives one of the least harmful options. People at times also may have to make a decision to walk away from a property if the bank will not work out a deal with them.
However, if you do decide to walk away, remember you will also be getting hit with a tax bill on the amount of debt forgiven in a foreclosure. If you can get the property sold and closed before the end of 2012 in a short sale, you will not be taxed on the forgiven debt amount. As of today this law will no longer be in effect as of January 1, 2013. This is extremely important to consider if you plan on doing a strategic default and choose to walk away from your property. Unless you can show you are completely insolvent, (your liabilities are more than your assets) at the time of the abandonment of the property, you will be held responsible for the difference between what the property sells for and what you owed. This will come in the form of a 1099 that is reported to the IRS. It will then have nothing to do with the bank and the tax collectors will be expecting some kind of payment when you do your tax returns.
Call today and discuss your options for a short sale or a traditional sale. You may even be a good candidate for a loan modification. This is a good place to start as well because many banks will want to go through the modification application and process before you opt for a short sale.
Chris LaHaie
Prudential Americana Real Estate
www.consideritsoldlasvegas.com
702-338-8526
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