Tri-Cities WA Short Sales

July 16th, 2011

We are often asked how a short sale will affect an individual’s credit as well as how long a person will have to wait before they are able to purchase another home. As we all know credit is used for more things than just getting loans. Bad credit can make it more expensive to rent or even rent at all and can also keep you from obtaining a job, especially in government service or the financial services industry where a security clearance is required.

Here are some facts about your credit recovery time and purchasing a home after short sale or foreclosure:

Fact #1: Post short sale or foreclosure, how quickly your credit score improves depends in part on how the problem is reported. In a short sale where the balance is forgiven and no deficiency is recorded in public records, recovery can be quick. By just paying all your debts on time could bring your score up to a reasonable range. This will not qualify you for a mortgage but will help with other credit requests.

Fact #2: A foreclosure or bankruptcy can weigh you down for as much as seven years before your credit would be considered good. Foreclosure or a bankruptcy will keep you from obtaining a loan for at least 3 years.

Fact #3: You CAN buy a home again. The Federal Housing Administration (FHA), Fannie Mae and Freddie Mac set guidelines for how long a borrower must wait after a “significant derogatory event.” These are all subject to various circumstances and conditions. The longest wait comes with a foreclosure.

Fact #4: Fannie and Freddie specify a two-year wait after a short sale, deed in lieu, or discharge or dismissal of bankruptcy. Three years after foreclosure. Without extenuating circumstances, waits can extend to four years after bankruptcy and seven years after foreclosure.

Fact #5: For FHA loans, they may be available three years after a foreclosure and two years after a bankruptcy is discharged. After a short sale, there’s a three year wait if the borrower is in default at the time of the sale and there are no extenuating circumstances.

Fact #6: Using FHA, if the borrower was on time with all payments for 12 months before the short sale, there is no wait specified. Translated, a FHA loan might be available immediately.

September 20th, 2010

While it is not  a huge part of our market for homes here in our Tri-Cities, WA market, we do run into a significant number of homeowners that need to pursue a Short Sale.  Some people may be asking what is a Short Sale?  Basically it is when a homeowner needs to sell a house due to lack of job, medical emergency, financial difficulty etc. and the house is worth less than what is owed on the property.  You have to work with the bank to get an “approved short payoff” on the loan so the house can be sold.  In many cases this is a better option for the homeowner and the bank vs. foreclosure.  However, it can be a complicated process and decision where the advice of an accountant and attorney are also encouraged. 

One of the problems we have been seeing recently in our local market is national based “short sale negotiating companies” charging large upfront fees, then not processing the short sale to success.  Over the years we have done a large number of short sales and as an agent we charge no upfront nonrefundable fees and we only get paid upon a successful closing of the transaction.  If you are in this position it is hard enough as it is, much less coming up with another $1500-$2500 upfront. 

Our team has been trained and we have special short sale designations on how to deal with these transactions and the complex issues that come up.  If you want to talk to a local agent that has the experience of successfully closing these transactions, does not charge up front fees, and is available to meet with you, please do not hesitate to call us at 509-727-8977, or send an email to sold@kenmoreteam.com.

December 2nd, 2009

A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan.

We have compiled a Top 10 List of Questions That Consumers Have About Short Sales…

Number 10
Q: I can’t make my house payments but I do have the ability to pay back all or part of the negative equity. Also, I want to preserve my credit score…is a short sale right for me?
A: Probably, not. In cases where you can pay back all or part of the negative equity (usually to the 2nd lien holder) it makes sense for you to work out a repayment plan. The lender will then release the lien and allow the home to close.

Number 9
Q: If I pay mortgage insurance and default on my loan, why wouldn’t that cover the deficiency amount?
A: The mortgage insurance is not there for your protection, just the mortgage lender’s.

Number 8
Q: Do I have to have my home ‘Approved’ by the lender prior to offering it for sale as a short sale?
A: No. Technically speaking there is no such thing as being ‘Short Sale Approved’. The actual approval only happens with an accepted offer.

Number 7
Q: I just missed a payment and I know I will miss more….how long does the foreclosure process take and is there time to do a short sale?
A: The foreclosure process takes differing times depending on the bank. Generally speaking a well priced short sale being processed by an educated short sale listing agent, like the Kenmore Team, will sell and close in less than 120 days.

Number 6
Q: Will I still have to pay property taxes if I do a short sale?
A: Property taxes will always have to be paid as part of any accepted short sale. Whether it’s you or the lender depends on their policies and the specific agreement you reach while negotiating the short sale.

Number 5
Q: I owe more than my home is worth and I can’t make the payment, do I have to somehow qualify for a short sale?
A: The simple answer is NO. If you can’t make your payment and you are otherwise insolvent you qualify for a short sale. Note: insolvent simply means your total debts are greater than your total assets.

Number 4
Q: Do I have to pay income taxes..I have heard that I will get a 1099? Will the loss the bank takes be treated as a taxable gain to me..the seller..is this true?
A: It WAS true, now it’s not. Consult your Tax Attorney or Qualified CPA. Very recently the tax law was modified and now most people who do a short sale will have no taxes due.

Number 3
Q: If I list my home for sale with a Realtor^®, how do they get paid…who pays their commission?
A: The bank will pay the commission along with all the other usual closing costs.

Number 2
Q: Do I have to miss a payment to do a Short Sale?
A: No. Most major lenders started accepting short sale offers from sellers who have never missed a payment.

Number 1
Q: I want to do a short sale and have a 2nd mortgage, does this make me ineligible?
A: No. Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holder.

If you are considering a short sale, the Kenmore Team is well qualified to help. Please feel free to give us a call at (509) 727-8977 or send us an email at sold@kenmoreteam.com with any questions you might have. We are here to help.