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Short Sale FAQ - Agents / Brokers

Agents / Brokers | FAQ | Alternatives - Agents | Seminars |

Q: What is a Short Sale?
A short sale is a transaction that allows for the sale of a property for an amount that is less than the amount that is owed to the bank. The bank in return accepts the proceeds as full settlement of the debt.

Q: How long does it take to close a Short Sale?
It depends on the property location, the lenders and other factors, but in general a short sale can take anywhere between 3-9 months.

Q: Why would a lender agree to take a loss on real property?
The lender will likely take a loss on the property in any case. Besides short sale, loss mitigation solutions usually do not solve the root cause for the borrower being in default. The alternative the lender has is to start a lengthy and costly foreclosure process, which will most likely result in a bigger loss on the property.

Q: Will the borrower have to pay capital gains taxes if he sells a property as a Short Sale?
No.

Q: Will the borrower have to pay taxes for a Short Sale?
The borrower may pay extra income tax if the bank sends a 1099 for the deficiency. Either the property owner or the lender will have to pay property taxes (depending on the policies and the specific agreement).

Q: Will Mortgage Insurance pay to cover the deficiency on distressed property?
It depends on the amount of the deficiency. Usually the mortgage insurance only covers a certain amount. Mortgage insurance is for the lender's protection and the lender will try to collect from the borrower before a claim with the mortgage insurance company.

Q: What if the property has multiple loans?
All lenders will need to be satisfied in some way to complete the short sale. If the first loan is partially covered by the short sale value, the negotiation takes place with the first lender. If the first lender is paid off by the sale then the negotiation takes place with the second lender (and so on if there are more than two lenders).

Q: Is it possible to start a short sales process when the borrower is current?
Yes.

Q: Is it possible to start a short sale process when foreclosure has taken place?
If the homeowner was evicted or the property was sold at auction, a short sale is not possible.

Q: Does a good credit score help the seller trying to do the short sale?
It may help in a limited way as long as the borrower is current or not in default.

Q: What will be the impact of Short Sale on the borrower’s credit score?
There is no clear answer but it does depend whether or not the borrower is current or is in default. Some lenders may mark the transaction as a settlement, which will hurt the score. However, typically the damage to the score is less significant than the damage as a result of foreclosure or bankruptcy.

Q: What is the effect of Short Sale on the seller?
The seller’s debt is cleared. Some lenders may mark the transaction as a settlement, which will hurt the score.

Q: What is the property owner required to do?
Sign a listing agreement with the realtor,
List the property for sale,
Cooperate with access, showings, offers and with the realtor and ISS
Agree not to finance or otherwise encumber the property
Vacate the home following close of title
Be responsible to maintain the home in "show" condition
Be a responsible homeowner until close of title and vacancy of home.

Q: What qualifies a borrower for a short sale?
Borrower must demonstrate a true hardship
Other loss mitigation solutions have not been successful

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I Short Sale, Inc. is a Real Estate Broker - CA Dept. of Real Estate - License #01773693
I Short Sale, Inc. 1-877-907-4678 info@ishortsale.com
Short Sale and Loan Modification Services
Woodland Hills, California. Los Angeles, California. Beverly Hills, California.

Negotiating short sales nationwide including:
San Diego, California. Miami, Florida. Phoenix, Arizona. Las Vegas, Nevada. New York, New York.
Santa Monica, California.. Thousand Oaks, California. Agoura Hills, California. Sherman Oaks, California.
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San Francisco, California. Reno, Nevada. Tampa, Florida. San Jose, California. Oxnard, California.
Culver City, California. Seattle, Washington. Philadelphia. New Jersey.

The information contained in this website is intended to be used for informational purposes only and to provide a general overview of the topics described herein. There may be tax and other legal consequences associated with a short sale. I SHORT SALE makes no representations or warranties concerning potential tax or legal consequences relating to any final disposition of any property. Clients are advised to consult with a tax professional regarding the potential tax consequences for their particular situation. I SHORT SALE is providing a service in response to a complex situation and offers a recommended solution where possible. Nothing is represented as tax advice to our clients as every situation may result in different tax consequences. I SHORT SALE is not a law firm or an accounting firm and regarding any specific questions relative to any transaction, I SHORT SALE strongly encourages all parties, agents, and brokers involved in a transaction to seek such advice from a professional advisor. Legal Statement. Read here our Privacy Policy.

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