Over the past year short sales have been a very difficult with little success, but the tide is changing. Now that there are so many foreclosures occurring, banks are now starting to play ball when it comes to a short sale. Yes, they are still difficult but more and more are going through. The difference is some agents are now employing companies that only deal with short sales to aid in the transaction of a short sale. There may be tax liabilities in a short sale to the seller, so the seller should talk to a tax consultant before going through with a short sale.
Many of my clients call me and request a list of Short Sale listings. When I ask them if they “know what a Short Sale is” the response is usually, “the sale will be fast”. That is usually quite the opposite. Try one to six months!
A Short Sale has nothing to do with time! Rather it is the Seller selling their home “short” of the amount of money owed to the bank. The Seller is trying to avoid a Foreclosure.
Why would a bank agree to take less money? If the bank will lose less through a Short Sale than a Foreclosure there is a chance the bank will agree to accept less money.
Is this the answer to our housing woes? No. The lending companies look at different aspects as to whether they will agree to a Short Sale:
♦Is it in the best interest of the lending institute?
♦Why is the seller in financial straits?
♦Does the seller have a 401K, savings, stocks, other real estate holdings, or anything that will allow the seller to continue paying on the loan?
♦If there is a second lender, will it agree to the sell or will it say no to the sell?
Whew! The sale went through; the Seller’s problems are over. Not quite. The Seller may now have a tax liability. The loss the bank incurs could now be considered a gift to the Seller. The Seller should seek the advice of a tax consultant or lawyer before choosing the Short Sale route.
Diane White
www.BakersfieldHomeSearch.com
Prudential Bakersfield Realtors
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