What is a Short Sale?
WHAT IS A SHORT SALE? A “Short Sale” or “negotiated settlement” or “short pay” occurs when a Lender agrees to accept less than the amount owed as a payoff on a loan. If the property is worth less than the amount owed on the loan, then even if the Lender forecloses and takes back the property, they know they are going to take a loss. We can often convince them that the Lender will “do better” if they take less than what is owed now, in cash, rather than waiting and taking the property back by foreclosure and trying to sell it later.
EXAMPLE: If the unpaid balance of a loan is, say, $200,000 and today’s Charleston, SC market conditions dictate that property will only sell for $104,000: under a SHORT SALE the lender might accept $104,000 as payment in full. THATS A DIFFERENCE OF $96,000 in SAVINGS to a potential BUYER AND $96,000 less that the SELLER would have to come up with at closing.
Many SC lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to sell the property now rather than foreclose; However–NOT ALL SELLERS nor ALL ChARLESTON PROPERTIES QUALIFY for a short sale. We look at all the facts to determine if a property may qualify. Submit Your Charleston Property to SCHomeBuyers.net to See if You Qualify
IS THIS LEGAL? Yes. We simply ask the lender to take less than what is owed. It’s legal and is done hundreds of times a day in almost every state.
HOW LONG WILL IT TAKE?The short sale negotiation process is a lengthy one. It may take several weeks or more likely several months to get an approval. Many Lenders have several layers of bureaucracy, insurers, and investors that we will have to maneuver through in order to get a short sale approved. So, it is important to be patient during this long process.
MY CHARLESTON HOUSE IS GOING TO FORECLOSURE, WILL I HAVE ENOUGH TIME? Maybe, maybe not. Just starting a Short Sale will not automatically stop a foreclosure. However, many times we can convince a Lender to stop the foreclosure. So, while there are no guarantees, it never hurts to try.
CAN I STAY IN THE HOUSE? The key word in “Short Sale” is sale. The purpose of a Short Sale is to get the property sold. So, you will be moving. The sooner you move out the easier it is to show a home. We are very creative when it comes to selling houses, and our buyers want to look at the houses as soon as they know we’re working on the short sale.
WHAT IS A RELEASE? A Lender may offer to “release” its security interest against the property in exchange for less than the total amount of the note. A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied unlessit is specifically negotiated.Advantages: This successful Short Sale will allow the property to besold thus avoiding a foreclosure on your credit record. Disadvantages:The remaining debt on the property (also called a deficiency) could still exist, unless it made part of negotiations with the bank. You would still be liable for the note – in other words, you still owe the money if it is not made part of the sale. Reality: Remember the old southern saying, “you can’t get blood out of a turnip.” It is not likely the Lender will pursue the deficiency unless you have other significant assets. Most importantly though, SCHomeBuyers.net has a 98% success rate of getting a deficiency waived!
WHAT IS A “SATISFACTION? A Lender may agree to accept less than it is owned as complete and total satisfaction of the note and releases its lien against the property. It is something we always ask for, and frequently receive.Advantages: Your note and obligation to the Lender are satisfied for less than you owe. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences as the Lender may issue you a 1099 form, saying in effect that you are liable for taxes on between what we purchase the property for and what the balance on the loan was. However, IRS rules say that if your liabilities outweigh your assets, you aren’t liable for the amount owed. Also, due to the Mortgage Debt Relief Act of 2007, this IRS Tax Deficiency is usually not even an issue if it’s a primaryresidence.
WHAT IS A “DEED IN LIEU OF FORECLOSURE? A Lender may offer a Deed In Lieu of Foreclosure. What this means is that you will Deed the property back to them instead of letting it go to foreclosure. The problem with some Lenders is that they don’t advise you that they are NOT accepting the Deed as full satisfaction. So after you Deed the property back to them, they go after you for a Deficiency Judgment. If you have a second mortgage on the property and it is not with the same Lender, there is no way that you can Deed the Property back to the First Lender and they give you a full satisfaction. The reason is that the first lender received the property and the second lender received nothing. Should you Deed the property back to the first lender, the second lender WILL go after you because of the promissory note you signed whenyou purchase the property. You may also be liable to the IRS for this as a Tax Deficiency, Submit Your Property Information Here, and let us buy your Charleston Home today!
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