A short sale is a real estate transaction in which the sales price is insufficient to pay the debt(s) and obligations encumbering the property along with the costs of sale, and the seller is unable to pay the difference.
Every short sale is dependent upon the seller’s lender(s) consenting to the transaction and agreeing to release the lender’s security interest in exchange for less than what is owed. In some cases however, the lender’s approval of a short sale does not necessarily mean the lender relieves the seller of liability for repayment of the entire debt.
It is possible the seller can sell the home and still owe the unpaid difference, plus interest and penalties, to the lender (the “deficiency”). The lender may then seek a deficiency judgment against the seller for this difference. If the judgment is issued by a court, it could be in effect for up to 20 years if not paid sooner. This is one of the most fundamental issues that sellers must address in considering whether to sell property as a short sale.
Simply “walking away” from the property through foreclosure also does not necessarily relieve a seller of these debts as while Washington State is a “non-deficiency” state that only pertains to the foreclosing party. A homeowner could lose their property to foreclosure generally to the 1st mortgage lien holder and still owe the balance(s) from the 2nd mortgage or other lien holders.
A short sale is a very complex transaction that involves numerous issues as well as legal and financial risks. All sellers should seek the advice of a lawyer and tax professional before proceeding with a short sale.
Professional Short Sale Negotiations
McFerran & Burns, P.S. is the premier attorney short sale negotiation practice in the State of Washington with 1,000's of satisfied homeowners. Below is McFerran & Burns, P.S. Welcome video and after watching their video please visit their website for more information on short sales.
Get Help Right Now
Short Sales are common in Washington. You have nothing to be embarrassed about. You DO need to act Quickly though. We understand the Washington Foreclosure Timeline and are here to answer your Short Sale Questions. Our South Puget Sound Short Sale Specialist is standing by so call 253-234-9780 or GET SHORT SALE HELP IN WASHINGTON NOW by requesting help online.
There are NO upfront fees to worry about so we can get your Puget Sound short sale started today. Whether in the Auburn/Kent area, the Bonney Lake/Lake Tapps area, or further south in the Puyallup/Tacoma area, we are here to help with your short sale. When you call, a Puget Sound Short Sale Agent will schedule a time to meet and put you in touch with legal counsel should you want to discuss short sale vs. foreclosure options. WE CAN HELP – but you must act now. Call 253-234-9780.
Why Should I Choose A Short Sale Over Foreclosure?
Whether you should do a short sale or let your property go to foreclosure depends on several factors. This is why we use McFeren & Burns, P.S. and we recommend you always consult with a legal proffesional who can better advise you. Overall, we believe, a short sale makes more sense than foreclosure. In general, if you want to buy a home in the future, there will be more opportunities available, if you do a short sale. Also, unlike what you have heard, you can be current on your payments and still do a short sale.
How Do I Know If I Qualify For A Short Sale?
If your mortgage payoff is more than what your property would bring in when sold, then you would be eligible for a short sale. Every situation is different; here are the basic criteria for qualifying for a short sale:
•You need to sell your home.
•You owe more on your mortgage than your home is worth.
•You have a personal financial hardship that will prevent you from making future payments. (Examples of hardship include divorce, loss of job, death of a spouse and a medical emergency or illness.)
Is There Enough Time To Do A Short Sale Before A Foreclosure?
That depends; just starting a short sale does not automatically stop a foreclosure. But, sometimes a lender can be persuaded to postpone the foreclosure process to allow a short sale negotiation to take place. So, although there are no guarantees, it does not hurt to try.
What is a hardship package?
The Short Sale hardship letter is your opportunity to state your situation. The bank wants to understand why you can't make your payments and keep your home. A hardship can include medical emergency or illness, divorce, death, relocation, loss or change of employment, addictions causing money loss, taking care of sick parents, large amounts of child support and so on. The rest of your package is simply a combination of pay stubs, bank account statements, profit & loss sheet, and tax returns.
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Can or will a short sale affect my credit?
To find out how your credit will be affected, you will need to seek professional advice from an accountant and/or credit professional. It will affect your credit, but we are not licensed to tell you the specifics.
How is your (Realtor) services paid for?
The bank pays all our commissions plus items the buyer may ask for such as closing costs.
Are There Tax Consequences?
It depends on how the lenders final approval letter is written. They can forgive your debt and the tax laws may consider the forgiven debt as taxable income. However, if a lender agrees to a satisfaction, the Mortgage Forgiveness Debt Relief Act of 2007 provides for debt forgiveness, based on the following:
•The home has been used as your principal place of residence for at least two of the previous five years.
•The debt has been used to buy, build, or make substantial improvements to the home.
Home equity loans where the money was not used to buy, build, or improve the home do not qualify for the exclusion. Neither do mortgages for second homes or rental properties.
There are additional tax considerations to keep in mind. You should always confirm tax matters with your tax attorney or tax professional.
