What is a short sale? 

With a short sale the homeowner (seller) owes more than the amount of the purchase contract on his/her home and is unable to bring the needed cash to closing therefore the sale will require the approval of the seller's lender.  The seller may or may not be late on mortage payments but should always be able to prove some kind of financial hardship i.e. mounting medical bills, loss of job, death of spouse, etc.

At Plan B we specialize in negotiating short sales for homeowners by working with your mortgage lender(s) to devise solutions.  One option is for the lender to allow the home to be sold as a short sale.  There are some good potential benefits to selling your home as a short sale:

• Your home gets sold, the mortgage is fully paid off and the mortgage lender accepts a discounted payoff.
• You have no out-of-pocket costs at closing as the mortgage holder pays virtually all sales costs including title and escrow, commission, and approved property repairs.
• Your credit is protected from foreclosure which may lower your score by 250-300 points.  With a short sale only late payments will show and you will be eligible for a Fannie Mae backed mortgage after only 2 years. 
• You can move forward with your life without having to worry about your house and your mortgage.

What can affect a short sale?

• After the lender receives the short sale packet, the lender may require 30-60 business days to approve the short sale. After approval, the sale must close within lender approved time frame, typically 30 calendar days.
• The seller will receive no cash from this transaction. Any funds usually due to the seller will be paid to the lender.
• The seller has no additional cash and will be unable to pay for any closing costs, such as the buyer's appraisal or home warranty. Should the buyer desire a home warranty they are free to purchase one at closing.
• The seller may be unable to pay for maintaining the property. The property will remain in the current condition through closing; the seller will not be able to make any repairs to the property.
• The seller's broker will typically split the commission 50/50 with the buyer's broker on any commission paid by the lender that is under what has been advertised in the MLS. Please note that since the lender is taking less than what is owed to them in a short sale, the lender in some cases may negotiate a lower commission percentage.
• The seller's forgiven or cancelled debt may be taxable income. The seller should discuss this matter with a tax professional. This has no bearing whatsoever on the buyer.
• In some cases the lender may pursue a deficiency judgment against the seller for any funds not collected at closing. This has no bearing whatsoever on the buyer.

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