CT Real Estate Barbara Altieri

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Short Sale Frequently Asked Questions (FAQs)

Short Sale Frequently Asked Questions (FAQs)

A short sale is the sale of real estate where the lender agrees to accept less than the amount owed on the mortgage instead of completing a foreclosure action on the property.   For example, if you owe $250,000 on your house and the market value of the house is only $220,000, you might be a candidate for a short sale.  

A short sale is an honorable agreement between the sellers, buyers, and the lender.   You will not owe a dime to the lender anymore, you will not have to pay any closing costs or expenses, and there is NO upfront COST to pre-qualify. 

For the seller, a short sale is "good" transaction compared to a foreclosure or bankruptcy, which will completely destroy your credit.  A short sale does have its credit ramifications, of course, but nothing like a foreclosure or bankruptcy.

What is the qualification process for a short sale?

The lender will require proof that the owner does not have the financial ability to pay the shortfall.  A hardship letter, as well as financial statements, tax returns, pay stubs, bank statements and W-2s will be required.

What is considered a "hardship" by the lender?

Reduced Income
Medical Bills
Too Much Debt
Death of a Spouse
Death of a family member
Payment Increase
Business Failure
Job Relocation
Damage to Property
Military Service

Who pays the REALTOR commission and closing costs?

  The lender does.  The seller pays $0 out of pocket, period.

 If a home is sold short, can the bank come after the owner for the money?

We will work to get a full release for you at closing.  This release will fully forgive any deficiency between the amount you owe, and the proceeds for the sale of the house.  Additionally, the Mortgage Debt Forgiveness Act of 2007 will allow you to exclude cancelled debt as income on principal residences only.

 What does the lender need to approve the short sale?

Every lender has its own rules and ‘packages' required.  Generally speaking, a lender will approve the short sale if the following conditions are met:

A fully executed contract showing a buyer with pre-approval
A copy of the listing agreement with a REALTOR
A price that reflects the true market value
Verification of the value with a broker's price opinion
Owner must state hardship in hardship letter
Financial statement and supporting financial information
Seller cannot receive any proceeds from the sale
An attorney prepared settlement statement showing all costs

 How much work will this take?

Not much for the seller other than full cooperation with the short sale team leader gathering financial information and forms needed to present to the lender. We will handle the negotiations and details with the lender as well as the process involved in listing, marketing and selling your house.

  Will a short sale prevent or stop a foreclosure?

If a foreclosure action is already in progress, the seller must retain legal representation immediately because the lender could obtain a foreclosure judgment before it even approves a short sale request. Lenders can take two weeks to two months to make a decision on a short sale. 

 Can any Real Estate Agent assist me in selling my home in a short sale situation? 
As processing a short sale is a highly specialized process, it is imperative you use the services of a team, which includes a short sale trained realtor, an experienced workout specialist and an attorney experienced in short sales.  

 Beware of investors if you are in financial hardship or facing foreclosure.  Please do the research; and if you do not use our team, be very cautious.   Never sign a quit claim deed, power of attorney or an option to purchase your home without consulting an attorney.  We are NOT investors; we are here to look out for YOUR best interests in the sale.




Barbara Altieri, REALTOR®
Listing and Buyer's Agent
Certified Short Sales Specialist
RealtyQuest Real Estate Sales and Services Team

Kinard Realty Group
30 Huntington Street, Shelton CT 06484
Office -- 203.929.1752
Cell -- 203.520.6930
Email -- barbara.altieri@realtyquest.com



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Comment balloon 0 commentsBarbara Altieri • June 14 2009 09:42PM
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