Short sale explained by who, what, when, where, why, how
There are many terms relating to real estate: listing, motivated seller, mortgage, buyer’s market, seller’s market, earnest money deposit- the list goes on forever! One term that can have people in a tough situation is a short sale. Read further about a short sale explained in the views of: Who, what, when, where, why, how does it affect other than the homeowner?
First, some reasons WHY a homeowner may find themselves in a short sale situation:
- Getting behind on payments
- Market takes a downward turn therefore property values drop
- Another buyer wants to purchase for less than what is owed
Below are examples of a short sale explained by real estate professionals from www.alignable.com and from Fortune Builders of a short sale explained by who, what, when, where, why, and how:
WHO: Homeowner, lender, maybe collections bureau, attorney:
Peggy McCready, Realtor, Fort Worth, Texas give the WHO of a short sale explained in this manner:
“When a home owner is behind on their payments and the lender agrees to take less than is owed. Getting lender approval is the key. When someone gets behind on their payments, they have late fees, attorney fees, etc. that are added to the payoff.”
WHAT: Homeowner defaults on mortgage to prove financial hardship which causes the amount owed to be greater than the property value:
Sean Sessions, Founder of the Real Estate Ninja and Owner of Southern Home Buyers, LLC: http://www.seansrealtygroup.com
“You would have to let the house default before a short sale is even an option.”
Eddie Bodkin, Fortune Builders:
“The only reason to do a short sale is when what is owed is more than what the property is worth. Not the other way around. Another problem will be the negative impact on their credit.”
WHEN: Within a couple to several months of default:
Linda Petersen, Manager of Homes for the Win, Austin, Texas: http://www.homesforthewin.com/
“The homeowner can NOT profit from a short sale! Meaning, NO money in their pocket. Banks usually only accept short sales if they are not current. And going delinquent will hurt their credit, making everything more expensive. Not the way to go. In addition, the short sale process will take 3-6mo+ and… have to bear their financial soul every month to prove they can’t afford it.”
WHERE: Depending on where the property is located, there are credit and tax consequences:
Randy Hood, Real Estate and Mortgage Broker at Atlas Home Buyers, San Marcos, California: https://www.atlashomebuyers.com/
“(Have) education about the credit damage and potential tax consequence of a short sale. It is different state to state. Refer them to a CPA for the info. Ultimately, the amount the payoff is short becomes income to the seller and the lien holder is supposed to 1099 them for that amount.”
WHY: Perhaps other potential buyers make offers, but can’t be accepted due to not covering the payoff amount:
Theresia Kurnadi, Fortune Builders:
“Even if the bank would allow short sale, they will require that the house be listed on MLS first. The seller needs to sign with an agent.”
HOW: Homeowner may not feel there are other options:
Sandra Porter, Real Estate Agent from Alignable in Harker Heights, Texas:
“….it is when the payments fall behind and they work directly with the lender for a price that is less than the payoff. Problem is it takes awhile for negotiation and…it could possible go into foreclosure proceedings.”
When a homeowner contacts Reel Property Solutions, LLC about a property in a financial distress, most times the homeowner has fallen behind on payments and fearing the short sale explained by their situation. The key is to be open minded, be honest with everyone, and know that a better living situation can be a smooth process. The who, what, when, where, why, and how’s of this process:
WHO: Homeowner in distress contacts Reel Property Solutions, LLC at 507-218-8788 or info@reelpropertysolutionsllc.com.
WHAT: Reel Property Solutions, LLC will ask some questions to become familiar with the property, the situation, and possible short sale explained with the distress of the homeowner.
WHEN: Reel Property Solutions, LLC will want to schedule a time to meet and tour the property as soon as possible.
WHERE: Everyone who wants to be involved will meet at the property address.
WHY: Reel Property Solutions, LLC wants to help, avoid the short sale explained by the homeowner, and do business by the motto CATCH A WINNER!
HOW: Bank payoff papers will be presented, an offer is presented, and then the close will be discussed.
If you or someone you know is in a predicament of a possible short sale, reach out to Reel Property Solutions, LLC.
info@reelpropertysolutionsllc.com or 507-218-8788
CATCH A WINNER!
