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Short Sale v. Foreclosure
by Annie Christian - Special to the Sparks Tribune
Mar 02, 2012 | 2026 views | 0 0 comments | 14 14 recommendations | email to a friend | print
Annie Christian
Annie Christian
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Advantages to Homeowners

Are you kidding me? Homeowners can receive incentives such as money when they short sale? Does everyone qualify? Yes. Homeowners are receiving monetary incentives from their banks to short sale. Why? Since HAFA short sale came on the scene to offer homeowners $3,000 in April 2010, other banks have been offering monetary incentives for homeowners to short sale. Clearly to foreclose is a much longer and expensive process. Short sale seems to be a win-win solution for the homeowners and the banks.

Here are some frequently asked questions from homeowners.

Q: Who qualifies for the cash incentives?

A: Just about any homeowner qualifies for the cash incentives. Do ask your bank when you are short selling a cash incentive.

I have seen FHA homeowners get up to $1,000 to $4,000 at closing. Most conventional loan homeowners get up to $3,000 in a HAFA short sale.

Q: Do I have to move out when I list my house for short sale?

A: No. Homeowners typically stay and maintain the home during the short sale.

Q: Do I have to make any repairs to my house?

A: No. Homeowners do have to disclose any known conditions that are negatively affecting the value of the property. Buyers can then decide whether they want to purchase the property and make repairs once they are owners.

Q: How long do I have to stay in the property once it is listed?

A: A short sale is a long process. A typical short sale takes an average of four- to six- months from the time an offer is received. It may take longer when the buyer loses his job and the process has to start over.

Q: Will I have to pay back any deficiency on my loan to my bank?

A: Homeowners that can demonstrate consistent financial hardship when they short sale their homes are usually not at risk on their primary loans.

Q: How will homeowner know for sure that their bank will not pursue them for the deficiency?

A: Banks will usually put in writing on the short sale approval letter that they will waive or discharge the deficiency. Or your realtor will ask them to put it in writing on the final short sale approval letter.

Q: How soon can I buy another house after I short sale?

A: Veterans can buy two years after they short sale. Civilians can buy three years after they short sale.

Consult with a local loan officer to rebuild your credit if you are interested in buying another home.

Q: Will the IRS ask homeowners to pay taxes on the debt forgiveness?

A: Another incentive for the homeowner to short sale is the fact the Debt Relief Act expires at the end of 2012. The Debt Relief Act provides additional peace of mind for homeowners that have true financial hardship to short sale.

Q: I am being forced to short sale my home in Sparks because of my job transfer to California. Will I be able to buy immediately?

A: Every homeowner’s story is unique and will be considered by an underwriter of a home loan individually. It is best to consult with a local loan officer once your short sale is completed for a better idea.

Q: Is $3,000 enough money for me to short sale my home?

A: I totally understand that you have invested time and money in your home. Banks are offering this money as a move-out assistance to homeowners. Do check with your bank to see if they are offering this move-out incentive.

Q: Can a short sale home command a higher sale price?

A: Yes. A short sale is usually maintained by the homeowner, therefore it shows better than a vacant/destroyed foreclosure.

In a short sale, homes are sold for less than what is owed and the bank forgives the excess debt. Banks who have been reluctant to approve such deals in the past are providing approval of the short sales. Short sale has clearly become a much better proposition than letting the homeowner fall into foreclosure. In short, a short sale is a win-win for the homeowner and the bank.

Most homeowners who are unemployed or under-employed should check with their banks about foreclosure options. Homeowners that need to move with their jobs to another state or move closer to their family should also check with their banks about their short sale options and incentives.

Annie Christian is a real estate broker and owner of The Annie Christian Real Estate Group. She helps with everything from buying and selling to foreclosure and short sale. To submit a question, call 351-5117. Her website is www.anniechristian.com.
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Short Sale v. Foreclosure by Annie Christian - Special to the Sparks Tribune


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