Tips for a Successful Short Sale

Unfortunately, many of you owe more on your home than what it is worth. When you're in this position, every dollar counts. We put together the following list to help you accomplish a short sale.

1. Determine Who You Owe
Your short sale must be approved by all companies with a mortgage or lien against your home. This includes not only a a first, second or even third mortgage, but it includes anyone with an equity line, a home owners association, or even any contractors who may have placed a lien on your home. Make a list and start talking to everyone early in the process. Ask what documents they'll need from you.

2. Get Everything Together
Gather the paperwork your creditors and mortgage lenders asked to see. This will probably include your listing agreement and a hardship letter explaining why you need a short sale. You'll also need proof of what you earn and what you owe. Get copies of your federal income tax returns for the past two years.

3. Pick A Good Sales Team
You'll need to work with a team of short sale experts, including a real estate agent, an accountant and a real estate attorney. We can help you find good accountants and attorneys in southern New Mexico. If you want to do it on your own, look for agents and attorneys who advertise themselves as short sale experts. Interview three, and listen carefully for signs that they understand the complexities of the short sale process. Real estate agents should explain how they'll arrive at a suggested price for your home. Ask them to show you a sample short-sale package or for an example of a prior short-sale
success.

4. Expect Delays
There is a rule that says banks participating in the federal government's Making Home Affordable loan modification program must respond to short-sale offers within 10 days. However, it may take weeks or months for your lender to decide whether to allow you to sell your home in a short sale. If you have more than one lender or a lien, it will take even longer. Your lender and lienholders don't have to agree to your proposed short sale. They can reject your terms or make a counteroffer, which can create further delays.

5. Anticipate Demands
Get your team together and talk about short sale demands from lenders. Lenders may ask you to sign a promissory note agreeing to pay outstanding amounts after the sale is complete. Your team should be ready to answer these questions.

6. Know the Tax Implications
Any unpaid amount of your mortgage that is forgiven by your lender through a short sale may be considered income under federal tax rules. Ask your attorney or accountant whether you qualify to exclude that amount as income on your tax returns under the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act.

7. Think About Your Credit
Ask whether your lender will report the short sale to credit-reporting agencies. Having a portion of your debt forgiven may negatively affect your
credit score, but a short sale typically damages your score less than a foreclosure or bankruptcy. Ask you lawyer whether you'll be responsible for paying back the lenders' loss. If the lender says it will forgive any losses on the sale of your home, get that promise in writing.

For all of your Real Estate needs
The Evelyn Bruder Team is here to assist you.
Evelyn Bruder, CRS, GRI, ABR, E-PRO, Las Cruces' Only Cyberstar

Visit our comprehensive one-stop website for all the Real Estate Information you are looking for. For more information on selling your home, visit our Selling a Home in Las Cruces website.