Short Sale FAQ

What is a short sale?

A “short sale” is a home sale where the sale price of the property doesn’t pay off the existing mortgage or mortgages, but the lender agrees to accept less than the full payoff.  It is a form of a loan modification. Short sales are extremely common now in St. George, Washington County, and the surrounding towns.

Who pays for a short sale?

The bank pays for all of our services. The home owner pays nothing.

Why should I pick Tim to sell my house?

Tim has specialized in Distressed Properties (short sales) in St. George, Washington County, and Southern Utah since before the economic meltdown. He KNOWS short sales. He has a team that KNOWS short sales.  Tim is a Certified Distressed Property Expert.  He also is extremely professional, organized, and very hard working. He has succeeded in today’s tough economy by selling distressed properties – and helping both home owners and banks make the best out of bad situations.   But don’t just take our written word for it, e-mail or call Tim.  Let his team impress you before you make the decision.

How do I get a short sale going?

It takes two things… a buyer and the bank’s agreement.  Both are tough to get and take lots of effort with repeated contacts and myriads of forms and other pieces of information.   But for you it is easy… just call or e-mail us. We can take it from there. Most banks and mortgages aren’t located in St. George, or Washington County even, so this requires a lot of phone, mail, and fax contact. Having a team handle that makes it go easier and more successful.

How long does a short sale take?

A short sale is not a regular real estate transaction. In general, they will take longer to work out than a conventional sale. TImes in St. George/Washington County seem to be about in the 60 to 90 day range. Sometimes shorter, if the stars align.

Due to the volume of distressed properties banks are facing, their short sale and foreclosure departments are extremely busy.   Having contacts with each bank, and knowing their procedures can shorten this time.  Remember… the clock is running… if a short sale doesn’t happen, foreclosure will.

I’m almost in foreclosure, is there time to do a short sale?

If you are that close, please contact us. Foreclosure can be delayed if the bank thinks a short sale is an option that will save them money.

Does a short sale affect my credit?

Well, it isn’t perfect for credit, but it is WAY better than foreclosure. In short, it does affect it, but not to the devastating effect that a foreclosure does.

I have two loans on my house, can I still do a short sale?

Yes. But it takes twice the leg work.  But we do it all the time.

What are the tax consequences for the seller in a short sale?

They could be substantial if you make mistakes in the transaction.  Generally, forgiven debt – which is what a short sale is – is taxable income.  However,  The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.    Law on this changes frequently, so it pays to have an expert who deals with short sales and foreclosures every day guiding you through the process.   We know the forms, the processes, and as part of the RE/MAX team we have access to lawyers and other experts who can advise you in more complicated situations.

Should I do a short sale?

If you can’t make your mortgage payments, you will eventually be foreclosed out of your home. If you find yourself in that situation, you would be better served to control the how and when you leave your current home.

Should I be embarrassed about doing a short sale?

Absolutely not.  Virtually all sales being done now in St. George, Washington County and Southern Utah are short sales or foreclosures. Hardships happen, and shorts sales are a legal and honorable way to resolve them.

I’ve been offered a “take over the deed and payments” deal.

DO NOT DO IT.   You are still on the hook for the mortgage if they don’t pay. But you don’t get to live in your home.  A short sale is a better way to exit your house than this kind of deal, or a foreclosure.   If somebody has offered you this arrangement, refer them to us to help engineer a short sale that gets them into the house, and protects you from future obligations.

Do the banks just agree to whatever price is offered?

Definitely not.  They are looking to get as much out of the loan as possible. BUT remember, their next step is foreclosure which will cost them a lot more than a short sale.   Generally, if the bank feels that they will be in foreclosure, and that your reasons for not paying the loan is valid (job loss, divorce, illness, job relocation,  rapid increase in mortgage costs due to balloons), then they will agree to consider short sale offers.

They don’t approve all offers, but they know that if professionals are presenting the offers, backed up by valid market comparisons, and their past experience with those professionals, then the odds of approval are much better.

I’ve moved and the property has declined, will that be a problem?

Probably not. Remember, this is loss control, not a way to make money for them.  They will be more motivated to sell a declining property because waiting just means they lose more.