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2 Bumps

Has Anyone Sold Their House as a "Short Sale"?

What was the process like? I have a friend that is about out of options (she relocated for her job and can't sell her house). It's been on the market for a long time, she just can't keep up with two mortgages anymore. A Realtor suggested this as an option.

 
Scuba

Asked by Scuba at 11:19 AM on Dec. 2, 2010 in Money & Work

Level 34 (64,138 Credits)
This question is closed.
Answers (9)
  • You put the home on the market for what it will bring (not what you owe) when you get an offer you go to the bank and see if they'll accept that offer as payment in full. That way the bank won't be coming after you if you're short say $50,000. It hurts your credit but not quite as bad as a foreclosure. The reason banks are willing to do a short sale is because it's cheaper for them. It varies from state to state but a lot of states have extremely strict laws on how to evict someone and it can take months if not years. Not only that, but if they mess up even a little bit then they have to start all over. So it saves the bank time and money, and it gets you off the hook with a little less damage.

    I have seen banks offered say $100,000 on a $150,000 loan. They might say sure, but you need to bring another $5000 to the table or something like that. Also it's only going to work if you don't have the money to pay it
    continue:
    Erica_Smerica

    Answer by Erica_Smerica at 12:30 PM on Dec. 2, 2010

  • Can she try making it a for rent to own? More people are looking into that, they want to own but its getting harder and harder to take out loans. Also if she gets her house FHA approved she would open the home up to more buyers.
    There are other options other than the short sale and banks are so slow by the time she got it going she might already be in the process of losing it foreclosure and even then short sales sit on the market for so long as is.
    Gnomeofmyheart

    Answer by Gnomeofmyheart at 11:23 AM on Dec. 2, 2010

  • We were not able sell our house for the price of our mortgages. Restructure by GMAC was denied. While it was on the market, one person kept returning an offer to rent. We finally took her up on it and feel very fortunate that a renter bailed us out of our situation! She's paying rent that is about $500 above the market because she'll use the house as a Residential Care Facility. Without her, we probably would have short saled.
    CoolChick1959

    Answer by CoolChick1959 at 11:40 AM on Dec. 2, 2010

  • and you don't have any other assets... like if you have a million on the side, the bank probably won't accept a short sale.

    Hope that helps. It's a lot better option than a foreclosure- just make sure it's a short sale WITHOUT recourse.
    Erica_Smerica

    Answer by Erica_Smerica at 12:31 PM on Dec. 2, 2010

  • It's a short of compromise between a regular sale and a foreclosure. In a short sale the bank allows you to sell your home for less than you owe. Short sales ding your credit but not as much as a foreclusure.

    Has she considered renting the house out until the job marketin improves?
    HotMama330

    Answer by HotMama330 at 12:34 PM on Dec. 2, 2010

  • I tried to, but Country Wide would never except the deal.
    dancinintherain

    Answer by dancinintherain at 11:21 AM on Dec. 2, 2010

  • Short sales are hard, for many mortgage companies will not accept the offers. If offers are accepted, you have to claim the loss as YOUR INCOME come tax time. Say you owe 170K and short sale for 130K. You have to claim 40K as additional income you really didn't earn, come tax time.

    KairisMama

    Answer by KairisMama at 12:07 PM on Dec. 2, 2010

  • KaisisMama; the mortgage debt forgiveness relief act that Bush put into place (effective until 2012) allows you to receive up to $2 million dollars in forgiveness of a mortgage debt unless the residence is not a primary, so she won't have tax implications (unless her state taxes it, but the rate would be significantly less than Federal Taxes.)

    She already purchased another home, she had a buyer on her first one and then they didn't go through with it. Crappy situation all the way around.

    Gnome; no way it could be approved FHA, it's a really old home. That was a really good idea though!

    CoolChick - I don't know if renting is an option for her, there are a lot of homes for rent in the area much cheaper than hers - but I'll definitely let her know about that!
    Scuba

    Comment by Scuba (original poster) at 12:14 PM on Dec. 2, 2010

  • I wasn't aware of that OP. Interesting.
    KairisMama

    Answer by KairisMama at 12:16 PM on Dec. 2, 2010

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