Definition
A sale of a home in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting the short sale, the lender and seller can avoid a lengthy and costly foreclosure, especially in a declining market. The seller is able to pay off the loan for less than what is owed.

The short sale could be one of the best solutions for resolving your financial dilemma. If the home that is eligible is your primary residence you don't get taxed on the difference (Sale Amount - Mortgage Balance = Balance Owed (Taxable).
Examples of Hardship

Documentation Required from Seller

For Example
You owe $250,000 on your mortgage and it sells for $200,000, the lender will give you a 1099 form from the IRS as income you received and you would be liable to pay the taxes on the $50,000. With the new law that passed, if it is your primary residence you would not be liable.
 

Short Sale Pricing
After an offer is made banks will often request an appraisal, and may also order a Broker's price Opinion (BPO). When the short sale package is submitted to the bank, the listing agent should also include a Comparative Market Analysis (CMA). This will show the current sales activity that are comparable to the home.

Seller Must Qualify
In essence the seller is asking for debt forgiveness to satisfy the mortgage. The listing agent can help with submitting all the paperwork that is required from the bank, this will be the complete short sale package.

Buyers Qualifications
When submitting an offer to the bank the terms of the contract can play a significant role of whether the offer is approved or rejected by the bank. Buyers should submit a pre approval letter from their lender with the offer. If it is a cash offer the bank may be willing to accept a lower offer since there is not a mortgage contingency clause with the offer. If the bank does not agree to the sales amount the bank will reject the offer. The seller can then counter the offer and resubmit the offer if the buyer agrees to the new terms of the offer.

Buying/Selling A Short Sale
If you are considering purchasing or selling a short sale, there could be benefits and drawbacks. For your protection I highly suggest that you contact:
· A Real Estate Attorney
· An Accountant

There are many reasons you may find yourself in a Short Sale situation

• You owe more than the current market value
• You may have a second mortgage in the tens odf thousands of dollars
• You want to avoid deficiency judgement and the additional credit damage associated with a foreclosure sale
• Your payments have increased due to an adjustable rate mortgage
• Foreclosures in the area have driven down market values
• You purchased an investment property that has depreciated and is now losing money
• You are relocating and need to sell your home but your mortgage is more than the current market value
• You have experienced a loss of income and can not afford your payments

If you are faced with any one of these situations you may be a perfect candidate for a short sale. This will allow you to sell your home at a competitive price that is less than what you owe and be able to satisfy your mortgage in full. You'll be able to stay in your home until it's sold.

My Responsibilities-Tracey Mullen-Short Sale Specialist

1. Conduct a thorough market analysis on your property, Tracey is able to determine a competitive asking price that will deliver a high volume of interest on your home, Your mortgage balance has no bearing on the list price-current market values is what determines your asking price.

2. Tracey will list your property in the MLS. You are not responsible for any commissions. This is negotiated with your lender therefore you do not pay any commissions.

3. Tracey presents all qualifying offers and presents them as part of a short sale package to your lender(s).