The short sale process can to time-consuming. A lot of demand is placed on the seller, the agent, and sometimes the buyer as well.
Everyone loses something in a preforeclosure short sale. The lender gets less that it is owed and the seller gets a blemished credit report unless a lender agrees not to submit the negative information. If it does report the information, the seller has a short sale on his credit report for seven years like any other judgment.
Many lenders are so busy or so large that they can’t respond to short sale offers in a timely manner. Some properties go to auction because the lender couldn’t get around to responding to the offer fast enough. This is especially true if loss mitigation committees are involved.
Short sale can hurt sellers in taxes. Lenders can claim the debt they’ve forgiven as a loss on their taxes and issue a Form 1099 to the seller for that amount. The seller has to report it as income, and that income is taxable.
The process can be complicated and time-consuming, making it harder to attract potential buyers.
Most lenders won’t consider a short sale if the homeowner is in bankruptcy because negotiating a short-sale payoff is considered a collection activity. Collection activities are prohibited under bankruptcy law. A lender will not cooperate until the bankruptcy is discharged or its automatic stay or relief ha d been lifted. If the lender does cooperate, the seller will need approval from the trustee or bankruptcy court. This can further delay the process.
Most real estate agents are unfamiliar with the process. A lot of agents just don’t know what to do or how to do it.
Becoming More Common
Many subprime lenders are warming up to the idea of the short sale. Because the foreclosure rate is so high now, you have some lenders coming right out and saying, “Here’s what we’ll take.”
The number of foreclosures lenders have repossessed has skyrocketed and there only so many they can have on their books.
Because of the glut of foreclosures in some market, lenders have begun referring troubled borrower to experienced professionals to negotiate a short sale instead of foreclosing on them.
The short sale process can to time-consuming. A lot of demand is placed on the seller, the agent, and sometimes the buyer as well.
Everyone loses something in a preforeclosure short sale. The lender gets less that it is owed and the seller gets a blemished credit report unless a lender agrees not to submit the negative information. If it does report the information, the seller has a short sale on his credit report for seven years like any other judgment.
Many lenders are so busy or so large that they can’t respond to short sale offers in a timely manner. Some properties go to auction because the lender couldn’t get around to responding to the offer fast enough. This is especially true if loss mitigation committees are involved.
Short sale can hurt sellers in taxes. Lenders can claim the debt they’ve forgiven as a loss on their taxes and issue a Form 1099 to the seller for that amount. The seller has to report it as income, and that income is taxable.
The process can be complicated and time-consuming, making it harder to attract potential buyers.
Most lenders won’t consider a short sale if the homeowner is in bankruptcy because negotiating a short-sale payoff is considered a collection activity. Collection activities are prohibited under bankruptcy law. A lender will not cooperate until the bankruptcy is discharged or its automatic stay or relief ha d been lifted. If the lender does cooperate, the seller will need approval from the trustee or bankruptcy court. This can further delay the process.
Most real estate agents are unfamiliar with the process. A lot of agents just don’t know what to do or how to do it.
Becoming More Common
Many subprime lenders are warming up to the idea of the short sale. Because the foreclosure rate is so high now, you have some lenders coming right out and saying, “Here’s what we’ll take.”
The number of foreclosures lenders have repossessed has skyrocketed and there only so many they can have on their books.
Because of the glut of foreclosures in some market, lenders have begun referring troubled borrower to experienced professionals to negotiate a short sale instead of foreclosing on them.