- A short sale allows the homeowner to sell a home to a buyer for less than the money owed on the mortgage. The lender then may cancel the remaining amount owed.
- The borrower (you the seller) typically obtains an experienced REALTOR® to list, market, show and sell the home much like any other home on the market except a disclosure that it is a short sale.
- Once a ratified purchase offer is obtained the lender must then approve after numerous steps.
- If you are a military member please visit our dedicated FAQ page.
[su_heading]How to short sale in Virginia Beach and who should I hire?[/su_heading]
- You need an experienced short sale REALTOR(R) who knows the in's and out's of the process, experienced with many transactions, and keeps you informed throughout the process.
- See short sale reviews from happy clients here.
- We use a team approach with Virginia Beach and Hampton Roads Short Sales. This team consists of your REALTOR® and the Attorney's Short Sale Team. The Attorney consult is free and is encouraged prior to entering into a listing agreement. Contact our Attorney team here for more information.
- The use of the Attorney is mandatory as they are very proficient when dealings with lenders are required, have many “contacts” at financial institutions to expedite matters, and cover all the “legal” issues which protect your interests.
- Remember, this is a complex transaction and not a Walmart credit card. You need legal representation.
[su_heading]How to short sale in Virginia Beach and what are credit implications?[/su_heading]
- Yes, there will be credit implications with a short sale.
- The good news is that the damage to your credit rating is typically less than going down the foreclosure path.
- Lenders report differently with short sales. The lender can show the mortgage loan as discharged after a short sale, but some may show the note or debt was settled for less than owed and this may be more damaging to your credit.
It is best to get a clause in the short sale purchase offer/documents prohibiting the lender from obtaining a deficiency judgement. This is a must.
[su_heading]How to short sale in Virginia Beach - What else?[/su_heading]
- A foreclosure action--where the bank uses legal proceedings to enforce payment of the mortgage loan by seizing and selling the home at public auction--has a more negative impact on your credit rating and stays on your credit report for at least seven years.
- Below is the Fair Isaac information about how your credit is impacted. Remember, if you are current on other debts your credit hit can be much more minimal.
FICO®’s cheat sheet for the average hit your credit score will take for mortgage issues:
- 30 days delinquent, 40 to 110 points
- 90 days delinquent, 60 to 135 points
- Short sales, foreclosure or deed-in-lieu, 85 to 160 points
- Bankruptcy, 130 to 240 points
Fair Isaac also disclosed that the amount of damage done to credit scores from foreclosures has a lot to do with whether there is a deficiency balance left over. In other words, if the outstanding debt is forgiven in a short sale, an individual starting with a 680 credit score may see a drop as small as 50 points.
With a foreclosure and the home sold off by the lender/bank, and some of the debt remaining outstanding, homeowners will find themselves taking the biggest credit score hit.
[su_heading]How to short sale in Virginian Beach - and gaining control of the process[/su_heading]
- There is no difference with a short sale versus a regular conventional resale except the REALTOR® must disclose in the multiple listing service and purchase offer documents that the sale is a distressed or more common “short/comp sale".
- Your REALTOR® will list the home, market the home to prospective buyers, liaison with the Attorney's staff, submit forms, and keep you informed throughout the process from beginning to closing. Promptness on the part of your REALTOR(R) is paramount.
[su_heading]How to short sale in Virginia Beach - What are the monetary benefits[/su_heading]
- A fresh start can do wonders for the struggling homeowner.
- A short sale can leave homeowners with much more control over their financial issues and potentially limit the damage to the credit.
- A short sale can provide "light at the end of the tunnel" to homeowners and relieve some of the stress caused by the hardship.
[su_heading]How to short sale in Virginia Beach - The IRS and Tax Treatment [/su_heading]
- Yes there are tax issues with a Virginia Beach short sale. Specifically, the deficiency has tax concerns for both the homeowner and the bank/lender.
- When a bank/lender forgives debt because of a short sale, they are required to send a Form 1099-C to the homeowner/seller showing the amount forgiven. The lender does this because the unpaid loan balance allows them to take a deduction against bad debt reserves.
Keep in mind that the Internal Revenue Service considers debt/deficiency forgiven to be income particularly when the property is a second home or investment property. Annually, Congress reviews the Mortgage Forgiveness Debt Relief Act and has ruled in past years the deficiency to be not taxable (waived).
[su_heading size="36"]How to short sale in Virginia Beach - Contact Us Now[/su_heading]