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What is a Short Sale?

 

 

Claude Braunstein GRI, CRP, GMS

 A Short Sale refers to the situation in which the amount of money a seller receives at close of escrow, after paying off existing liens and all costs associated with the sale of the home, is insufficient to cover repayment of all existing liens against the property.

 

All existing liens must be paid in order to convey clear title. This includes lender liens against the property as well as other liens that attach to the property such as property taxes, creditor judgment liens, IRS liens and even unpaid child support payments.  The seller must negotiate with one or more of the lenders (lien holders) to accept a payoff "short" of the amount owed to the lender by the seller.

 

 Typically, the lender(s) will not process an owner's application for a short payoff until the seller has procured a qualified buyer to purchase the property.

 

 Lenders do not normally approve short sales unless the seller can prove that they have no assets with which to cover the shortfall between the sale proceeds and the amount of the outstanding lien(s).  Accepting a short payoff is voluntary on the lender's part.  It is therefore possible that the lender(s) will not agree to the short sale and that the transaction will have to be aborted

 

 The short pay approval process can take as little as sixty days or as long as six months or more, depending on the lender(s) involved. Typically, the lenders will require the seller to provide a copy of the buyer's offer, an estimate of the anticipated seller's proceeds, a letter of explanation regarding the seller's financial situation, financial statements, profit & loss statements and copies of tax returns.  Most likely, the lender will want to perform an appraisal of the property to insure the reasonableness of the buyer's offer and the legitimacy of the short sale request.

 

 In most cases, the property is likely to remain on the market, with the seller soliciting additional offers for submission to the lender(s), until the short sale is approved by the lender(s).  Thus, there is no guaranty that a prospective buyer will be able to purchase the property.

 There most likely will be credit and, possibly, tax consequences for the seller when a short sale is accomplished.  Sellers are therefore advised to consult with professional advisors such as attorneys and tax consultants when contemplating a short sale transaction.

 

Claude Braunstein has been listing and selling homes in San Diego for over 30 years.  He is affiliated with Coldwell Banker, the oldest and largest real estate firm in the world.  Claude has been ranked in the top 1% among Coldwell Banker agents worldwide.  He has also been recognized in San Diego Magazine as one of the Best Residential Real Estate Agents in San Diego County. Claude can be reached by telephone at 858-271-7770, or by e-mail at Claude@ClaudeBraunstein.Com.                                                                      

 

Short Sale Tax Relief Extended For One Year!

Great News For Homeowners in Scripps Ranch, Stonebridge and San Diego County!  When Congress approved "The Fiscal Cliff" tax deal,  a number of tax provisions that benefit current homeowners were continued.

The Mortgage Debt Forgiveness Act of 2007 has been extended for one more year. According to the National Association of Realtors, "the bill would extend mortgage cancellation relief for home owners or sellers who have a portion of their mortgage debt forgiven by their lender, typically in a short sale or foreclosure sale for sellers and in a modification for owners. Without the extension, any debt forgiven would be taxable, which, for underwater households, represents a financial burden."

The National Association of Realtors also stated "The exclusion from taxes for gains on the sale of a principal residence of up to $500,000 ($250,000 for individuals) remains in effect. Only home sellers whose income is $450,000 or above and the gain on the sale of their house is above $500,000 would pay taxes on the excess capital gains at the higher rate (with corresponding numbers for individual filers). For the vast majority of home sellers, there is no change."

The  extension of The Mortgage Debt forgiveness Act of 2007 is seen as vital to the recovering housing market in San Diego and nationwide.  Short Sales in San Diego County ,Scripps Ranch, and Stonebridge Estates had been surging in anticipation of the end of the mortgage cancellation relief on December 31, 2012. The Mortgage Debt Forgiveness Act will now expire on December 31, 2013.

For more information about how Claude Braunstein & Associates can help you with a short sale, sell your home for the highest possible price, or to search for your new home anywhere in San Diego, Scripps Ranch or Stonebridge Estates contact Claude Braunstein or phone our team at 858 271-7770. A Coldwell Banker affiliate with over 30 years of experience, Claude and his experienced team can assist with regular sales, short sales or relocations. We can also help you find the right home at the right price. Additional information is available on our website www.ClaudeBraunstein.com , where you can also search the MLS for a suitable home



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Posted on January 04, 2013 21:01:48 by Claude Braunstein & Associates