Short Sales
The Swallows Group has years of experience with short sales and has successfully closed numerous short sale transactions. Please call us if you have any questions about how these transactions work or would like to get started on buying or listing a short sale property. We can walk you through the process and help you understand what to expect. Below are some questions that will help you get started if you are thinking about short selling your home.
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Short Sale Q&A:
What is a short sale?
A short sale occurs when you owe more on your home than what your home is worth in this current market. Your lender agrees to accept less than what is owed against the home.
What is the advantage of short sale versus a foreclosure?
Selling your home through a short sale allows you to avoid having a foreclosure on your credit report. In addition, you may be able to turn around and repurchase a home in as little as two years once the short sale is completed. If you have second loan on your home such as a Home Equity Line of Credit, a short sale can allow you to settle out your obligation to that lender as well.
How do the realtor commissions get paid?
In a short sale the seller's costs are all paid for by the seller's lender. This includes real estate commissions. This means no cost for you as the seller.
How do I know if the bank will allow me to short sale?
You don't, until you try. The main qualification for obtaining a short sale is to prove your inability to pay to the lender. This is called your Hardship. They are various reasons for hardship. The most talked about and most obvious ones are loss of income or increased expenses. However, there are many hardships. Divorce or marital issues, overuse of credit cards or excessive financial obligations, and the deteriorating physical condition of the home. Loss of equity in your home is not a hardship.
Can my lender come back after me for the amount I am short?
Not in the majority of the cases that we deal with. We will work with your bank to get not just a release of their lien against your home, but a full release of any further monetary obligation from you. In Arizona, we have a law in place named ARS 33-729 that does protect you (in some cases) from the lender pursuing any deficiency against you. We work with many real estate attorneys and CPAs that can sit down and go over your individual situation with you.
What about the taxes that are due on the amount the lender forgives?
The lender will, in most cases, write off the difference as a loss. Your lender will then send you a 1099C for the amount they have forgiven. Due to the Mortgage Debt Relief Act you will not be required to pay the taxes on this money if you short sale your primary residence prior to 2012. Your tax accountant will be able to help you with this. In addition, there are other options that will assist you if your are selling an investment property. We work closely with your account to help you navigate your way.
What if I am already in foreclosure, can I still short sale my home?
Yes, most definitely. Although the lender may have already set a foreclosure date on your home, we may still have time to sell the home. In most cases, the lenders will work closely with us by extending that date out and allowing more time for you to complete a short sale.
Do I have to move out of my home to do a short sale?
No, it is just the opposite. You may stay in your home until your home has sold and closed. This gives you more time to secure additional housing.
Why would a bank do a short sale?
Banks have various reasons for participating in short sales. The main reason is that they minimize losses to the bank. Most of the time the bank will net more by allowing the home to be sold via a short sale than a foreclosure. Banks have been consistently working with homeowners over the years to help them short sale and avoid foreclosure.
What if the seller has no hardship or "has too much money" in the bank?
If the seller determines there is not sufficient proof of legitimate hardship the lender may still allow the short sale to proceed, but the seller may be asked to financially contribute to the deal, bring cash to the closing or sign a promissory note. This varies on a case by case basis and our knowledgeability and experience in short sales will allow us to sufficiently prepare you for this if it may occur.
What if the terms of the short sale the bank gives me are not favorable?
You will not be required to complete the short sale. Your obligation to complete the short sale is dependent on your agreement to all the terms of the approval your lender offers. This way, you are assured you are making the right decision. The short sale where the lender forgives you of your debt is the best option to avoid foreclosure, and has the least negative impact on your credit. If you chose not to complete the short sale and the bank will not forgive you of the debt, they may continue to pursue you for the loan balance.
How much does it cost the Seller to do a Short Sale with the Swallows Group?
Nothing. Ever. We will spend countless hours working and negotiating with your lenders on your behalf. We will not be paid until the home closes and we will be paid by your lender.
Short Sale Disclosure Statement Required By MARS
The Swallows Group is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
The Swallows Group is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.
