No Out of Pocket Costs for our Short Sale Services,
Your Bank Will Pay...including Taxes and Escrow Fees!
It is estimated by the US government that in 2009, over 50% of home owners who have a mortgage on their home will owe more than the value of their home. With over 90% of home owners unable to qualify for any debt forgiveness through a loan modification, short sales are the solution for most. Many home owners are delaying the inevitable, when true financial relief from a short sale is all they need.
Q: What is a Short Sale?
A: A solution where both the borrower and lender work together making it a win-win for both. Your bank gets paid when the home is sold at fair market value. You the borrower get your credit restored and save yourself and the bank from the foreclosure process, and possible future legal action or deficiency judgments.
Short Sales take place when borrower needs to sell their property for less than what is owed on the balance of the loan, while not having the monies to close out the sale of the property. Fees which can include but are not limited to, loan payoff in full, escrow fees, title fees, Broker commission costs, and delinquient back taxes.
By completing a short sale lenders then must accept the discounted payoff, meaning the bank will get paid less than the full loan amount owed, giving both the lender and the borrower to the solution of the debt. The end result is that the property is sold, the loan on the property is paid off and you avoid foreclosure. While saving your credit and giving yourself another opportunity to homeownership in as little as 18-24 months.
Q: What are the benefits to doing a short sale?
A: Stopping Foreclosure. Foreclosure can extremely impact your credit more than a short sale. In fact, some banks don’t even report a short sale. Your credit can recover from a short sale in as little as 18-24 months, BUT with a Foreclosure and/or Bankruptcy it will take 7-10 years. OUCH!
Q: If the Foreclosure process has already started, can I still do a Short Sale? A: YES! Your bank will be happy to work with you to do a Short Sale. If you have been given notice of a NOTICE of DEFAULT (NOD) or NOTICE of TRUSTEE SALE (T/S), you can still do a short sale. Both you and the bank can take the opportunity of not going to Foreclosure. It costs the banks in California an average of $175,000 per Foreclosure.
Q: How much will it cost me? Who will pay the Property Taxes, Realtor® commission fees, Title & Escrow fees?
A: NOTHING! You pay $0 out of pocket, period! The bank pays regular Broker fees to a Realtor, just like they would if they had to sell the property as a Foreclosure, and closing costs. Should the bank ask for any money, our CA$H buyers will negotiate to pay them off with no recourse to the borrower. Making the bank satisfied.
Q: Can I Sell my Investment Properties with a Short Sale?
A: YES! All types of property can be sold by Short Sale. The biggest part of the negotiations for your short sale as an investment property is to inform the bank you have a hardship and cannot afford to bring monies to the table and request to be 1099. You can than take your Profit & Loss (P & L) Statement to your CPA to help you file "Insolvency", using IRS Form 982.
Q: How much work will it take from me?
A: Little work. Just gather your financial information, sign your offer and we do the rest. We will handle the negotiations and details with your bank as well as the process involved in selling your property, keeping you up to date and through the process, step by step.
Q: Who is selling their property as a Short Sale? A: There are many homeowners who are selling by Short Sale, most are those who:
Obtained a Subprime Loan, Obtained an Adjustable-Rate Mortgage (ARM), Obtained a Zero Down Loan, Loss of Income, Unexpected Medical or Home Repair Bills, Divorce or Death of a Spouse, Transfer of Job, Military Service, andMarket Shift with Price Declines
Q: Can I stay in my house until the Short Sale is completed?
A: YES! You can stay in your home until the Short Sale is complete. If you have already moved from the property, we can have “house sitters” protect your home from any vandalism or theft. The bank wants to make sure the property is secure, and not open to vandalism, theft, squatters, drug trafficking and/or prostitution. Otherwise, this is called, "Abandonment of Property," and the borrower would be held responsible for any damages.
Q: Should I seek the highest price to help me avoid a deficiency judgment
A: All terms and conditions, including the sale price of your home are subject to your banks approval. Therefore, if a sales price is lower than you might expect, the price will always be first approved by you and a final approval from your lien holder. Your bank will make the final decision.
Q: Will I be taxed on the difference that I owe?
A: California real estate attorney Ron Ballard on behalf of Real Estate Strategies Institute, Inc. shares with us the following, “California is generally“non-recourse” State, which means a
homeowner will not be held personally liable for any portion of purchase money mortgage loans on a principal residence. This might include a first and second loan used to purchase a home which is secured by that home. A cash-out refinance or a home equity line of credit (HELOC) can create risks of deficiency liability. A “deficiency” is the difference between the balance due on a loan and the amount received by the lender. If the lender is legally allowed to sue the borrower and wins, then the difference is awarded as a “deficiency judgment.” There must be a successful lawsuit for there to be a deficiency judgment. The seller can evaluate between the risks of partial deficiency or total deficiency when the short sale is approaching closing. My professional contacts in the industry indicate that attempts to collect a deficiency in California are extremely rare. The combination of Code of Civil Procedure Sections 580b and 726 make it difficult for secured lenders to pursue deficiency judgments, especially once they have elected a remedy by commencing a non-judicial foreclosure (trustee’s sale).
Moreover, most lenders (banks) inadvertently waive their right to pursue a deficiency judgment by issuing and IRS Form 1099 to the homeowner. This must be done before February 1 of the year following a short sale or foreclosure. If the lender issues a 1099, they are affirming to the IRS that they have written off the loan. Once the loan is written off for tax purposes, it cannot be pursued against the debtor without the lender committing tax fraud.”*
Q: If I sell my home less than what I owe, can the bank come after me for the money?
A: “Each homeowner is advised to seek professional tax advice for their specific situation. However, in most cases, a seller will not owe federal income taxes & is unlikely to owe significant, or any, California income taxes on a short sale.
A homeowner should study IRS Publication 4681 regarding canceled debts and foreclosures and IRS FORM 982. Several exceptions usually apply to taxation of the debt forgiven or the possible income recognized. An exception applies to “qualified principal residence indebtedness”* for the amount of money borrowed to acquire, construct or improve a principal residence.
Another exception applies to the extent the seller was “insolvent” on the date the sale closed. Being “insolvent” is defined as having debts and liabilities in excess of assets. If the asset (the home being sold in short sale) has low sales price to establish its’ value, then the lower sales price increases the homeowner’s insolvency and the amount of debt that can be forgiven. Therefore, a low sales price can potentially be better for the seller. An insolvency worksheet can be found on Page 6 of Publication 4681."*