Short Sale - 5 Frequently Asked Questions
With short sales all the rage right now, there are loads of questions about them. Here are answers to 5 of them.
Do I have to miss a payment to do a short sale.
No you do not have to miss a payment. You do need to present a case to the lender as to why they would be better off with a short sale.
Will the loss the bank takes be treated as a taxable gain to me…the seller…is this true? I have heard that I will get a 1099.
It WAS true, but not today. The tax laws were changed, but we suggest you consult a person qualified to offer tax advice to confirm what applies to your individual situation. If you are in Connecticut, I highly suggest that you contact Don Brooks.
How can I pay an agent to sell my home?
Just like in a traditional sale, a Realtor will be paid from the proceeds of the sale. The bank will take the Realtors commissions in to account in evaluating your short sale request.
I just missed my first payment…how long does the foreclosure process take and do I have time to do a short sale?
The time a foreclosure takes varies by the state your property is located in. It will easily take more than 6 months, and maybe more than a year. But just because it will be months does not mean to ignore things for a while. Get help immediately. A short sale can be completed in 3-4 months with a Realtor who is experienced in short sales.
Do I have to get me home “approved” before I can offer it for sale if it will be a short sale?
No. There is no such thing as “short sale approved”. The approval can only happen with an accepted offer. You must be upfront with your agent, lawyer so that they can help you. You can arrange many of the documents beforehand that your lender is going to want to approve your short sale (income and asset documents, hardship letter, etc).
Want some lighthearted reading on short sale, check out Short Sale Games.
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