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March 2008 The Anatomy of a Short Sale and Options There is Hope!
-Top of the Morning to Ya. -And the rest of the day to yourself. This traditional Irish greeting and response are often heard around St. Patricks Day. We wish Top of the morning to you everyday. If you need a quick pick-up, watch this 3 minute movie of great quotes www.greatquotesmovie.com Our local real estate market is strong. Most towns still have a small inventory of homes for sale and prices are stable. At the same time, some home owners are facing financial hardship. Bad things happen to good people. Financial hardship is not a fun event. We all know someone in financial hardship, whether they let us know or not. They may not want you to know out of embarrassment or a sense of failure. Its not necessarily their fault. Market conditions and other situations may be out of our personal control. They may not know where to turn. There is not a lot of information on potential solutions available. When you find yourself in a hole, the first thing to do is to stop digging. That applies to a financial hole as well. There may be special programs that offer a way out. On the next page, we discuss the term short sale, how it can happen and what you can do about it. Think of this as a financial life preserver if you are drowning in financial debt. Grab the Opportunity. Do you need a financial life preserver? Do you know someone that does? We may be able to help! Rest assured that any information that you give us and all conversations that you have with us will be confidential. You can be one choice away from a new beginning. The Anatomy of a Short Sale The term short sale has re-entered our vocabulary in recent months. What is a short sale? A short sale is selling a property for less money than you owe on it. A shortage of equity. Simply stated, more money is owed on the house than you can sell it for. How does it happen? Many situations can occur that contribute to or create an upside-down equity position, ie. owing more on the house than it can be sold for. Losing your job, the death of the bread-winner, medical bills from an illness or loss of income from an illness or a payment increase from a variable rate mortgage are a few. In recent years, banks were pushing home owners to tap into their home equity to pay off credit card debt or buy a new car resulting in minimizing or eliminating the home equity. If you miss a few mortgage payments, the interest, late charges and penalties can push the amount owed above the home value. Bad things happen to good people. Financial hardship is not a fun event. We all know someone in financial hardship, whether they let us know or not. They may not want you know out of embarrassment or a sense of failure. Its not necessarily their fault. Market conditions and other situations may be out of our personal control. They may not know where to turn. The good news is, we can help. We have access to specialists with years of experience and a high success rate dealing with banks regarding short sales. There is a good chance that we can help them sell their home and eliminate the debt. We even have a nationwide network to help your friends and relatives in other areas of the country. A recent federal tax law change has temporarily suspended the income tax on phantom income from the loss. Until recently the amount of the loss was considered taxable income. If the short sale is completed by 2009, the loss will not be considered income for tax purposes. A short sale is looked upon favorably on a credit report in comparison to a bankruptcy or a foreclosure. A short sale is listed on your credit report as paid with a deficiency. It is interpreted as You have acted responsibly minimizing the loss. Banks are usually agreeable to a short sale to minimize their loss on under-performing assets. They are in the business of lending money. They dont want to own houses. A short sale usually costs the bank less money than the expense of a foreclosure. In a short sale, the bank will absorb the loss. You usually will not owe the debt after the sale. When you get back on track and your finances are in order, you should be able to buy another house in about a year. Think of this as a financial life preserver if you are drowning in financial debt. Grab the Opportunity. |
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