Sometimes homeowners can afford to keep making the payments but they know that they’re overpaying and they just want out of a bad investment. Today we discuss what the possible scenarios are for people who want to short sell their home without falling behind on the mortgage so that they won’t damage their credit
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As I explained in a post I wrote back in November “Will They Extend the Mortgage Forgiveness Debt Relief Act?” There were thousands of distressed homeowners that weren’t sure if they would receive “short sale tax relief ” or if they would be forced to pay income tax on phantom income when they sold their home via short sale. For most people that are in this situation, this would have been financially devastating.
When the Mortgage Forgiveness Act of 2007 was put in place because of the nationwide real estate collapse, for three years it guaranteed people that they could short sale their homes and move on with their lives without having to worry about having to pay income tax on the difference between the full payoff and the short pay off. Then after 2010, they kept on extending it for one more year.
For some reason, however, in 2014 congress took its own sweet time and nobody was sure if it would be extended yet again. Many distressed homeowners chose to just let their homes be foreclosed on in fear of the possible income tax implications. Other underwater homeowners rolled the dice and did a short sale anyway and prayed that the government would eventually do the right thing.
The people that took that chance and did a short sale anyway, lucked out big time because in December congress finally decided to extend law and on December 19 the president signed off on it making it official.
Of course, the question for the next year will be…Will They Extend it for 2016? Again the answer will be the same as it was last year. We’ll just have to wait and see. Unfortunately, not knowing if it will be extended again is not only bad for underwater homeowners that desperately need a short sale but for the Orlando real estate market in general.
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ORC closes another Orlando short sale. Jenny Zamora, Listing Specialist/short sale expert known for getting her listings sold in record time for top dollar has beaten the odds once again. Now… I don’t write about every short sale listing our company closes [or I wouldn’t have time to write about other stuff] but I felt that this one is worth sharing.
This Orlando home was originally listed by an investment group that claimed to be short sale experts and promised to get the job done fast and efficient, and of course… free of charge. In reality, they were actually wholesale flippers that ended up dragging the homeowner into deep water.
The strategy of a whole sale flipper is to submit a low offer to the bank on a distressed home in hopes that the bank will accept the offer so that they can flip the deal to another buyer without having to close on it themselves. If it works, the flippers make a few thousand bucks the seller gets rid of their problem and everyone’s happy.
However, if the bank rejects the offer the homeowner is then left holding the ball. Once the wholesale flipper realizes that they can’t make money on the deal, they will typically move on to the next potential seller [or victim] at this point leaving the homeowner in a bad situation to fend for themselves.
Getting back to our story…The lender set a foreclosure date just 30 days away and the investment group bailed on her when they couldn’t get the short sale approved. After reading our online reviews, the homeowner came to us thinking that all hope was lost and her home would surely be foreclosed on.
After consulting with distressed homeowner, we accepted the file and Jenny Zamora went to work immediately on the short sale. By using all our marketing tools as well as blasting the property details to our network of active home buyers from around the world, she quickly got the word out and managed to get serious investor interested in the property for a price that lender was happy with.
By getting all necessary documentation to the lender quickly in an organized and efficient manner, they stopped the foreclosure process allowing ample time for the new buyer to close on the property. As a result, the lender issued a new short sale approval letter that gave the buyer 30 days to close on the property even though the buyer only needed 10 days to close.
If you’re in need of completing a short sale on your Orlando home, please, please, please beware of so-called “short sale expert investors” that promise to save you from foreclosure. Be sure to research anyone you plan on working with extensively. Many of these companies are only out for their own financial gain at the expense of the homeowner.
It’s important to know that unlicensed investors aren’t bound by a code of ethics nor are they subject to follow the same laws that licensed realtors are. An Orlando realtor is sworn to put the best interest of the homeowner first and if they don’t, they can be prosecuted and potentially lose their license.
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When you hire a Short Sale Realtor t to take on your short sale, It’s just like hiring an attorney to represent you in some legal matter, so obviously you want someone with experience and a good track record.
The agent you choose is going to be dealing with your lender on your behalf which is a huge responsibility.
To begin with, they have to put together your entire file correctly to then move to the next steps of sending in offers, counteroffers, scheduling inspections, arranging showings, etc.
Right now there are a ton of cash incentive programs are out there and it’s important that your real estate agent is aware what programs you may qualify for or you could end up losing out on that those incentives.
Short selling a home is serious business. In fact, selling a house is one of the most important decisions a person will have to make in their lifetime,so it’s important that you hire a realtor that specializes in short sales.
What’s the best way to research an agent?
Like anything else these days, I recommend that you start your search with Google
Type in terms like “Orlando short sales” “short sale specialist” etc. A top short sale agent will have a strong online presence.
You should then choose 2 or 3 of them from the first page on the search results
Make sure that the agents that you choose are experienced in your area.
You should then start the interview process by asking these agents some key questions such as the following:
1- How many successful short sales have they done?, How many have they done in the past six months?, What’s their closing rate?
2- How many active short-sale listings do they have currently?
3- Do you have any references or testimonials from past clients? And is it OK to contact them?
This will give you a very clear picture of what you can expect moving forward.
If you follow the steps mentioned above, then you will know exactly which one to choose. Because remember, it’s not just about being a good agent. It’s also who do you feel comfortable with.
Short selling a home will be one of the most important transactions of your life. So it really is worth the extra effort to thoroughly research the agents you’re thinking of hiring before signing that listing agreement.
Feel free to contact us with any more questions you may have at 407-902-7750 or visit https://orlandorealtyconsultants.com/short-sales/
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The mortgage industry is once again experiencing an increase in short sales. Since 2012 the number of short sales with Freddie Mac has gone up substantially. This rising trend will leave the Orlando real estate market a target for short sale fraud.
A short sale can happen when a homeowner can longer pay the mortgage on their property and the lender allows them to sell the home for a discount of the principal balance owed to the bank or investor. Banks are willing to do this because they can avoid taking the property through a costly foreclosure process.
Homeowners benefit by avoiding a foreclosure on their credit which can last up to 7 years as opposed to a short sale which stays on your credit for an average of two years. Many times homeowners are eligible for relocation costs from the lender. This amount is usually around $3,000.00.
Without trying to sound like an attorney, short sale fraud can basically be described as deceitfulness or trickery when directly related to a short sale transaction. Fraud can appear in many different ways during a short sale and on both sides of the transaction.
It’s deliberate misrepresentation or omission of a fact or circumstance that would convince the lender to go through with a transaction that a lender would not approve if they were aware of all the facts.
1-The buyer of the short sale property selling or “flipping” the property immediately after the closing. This type of transaction can also be referred to as a “double” or “simultaneous” closing and can sometimes involve the use of two separate title companies.
An example would be if the seller or borrower owed $150,000 on a home that is only worth $100,000. The short sale lender accepts an offer of $75,000 from the realtor or facilitator. The buyer will then have a buyer lined up for $95,000 and both transactions close on the same day and the facilitator pockets the difference thus increasing the lender’s net losses.
2-The borrower’s hardship was fabricated for the purpose of getting the short payoff approved.
3- The short sale facilitator purposely damages the property in order for the BPO [brokers price opinion] to come in lower than it would if the property hadn’t been damaged.
The best way to avoid any type of fraudulent situation when it comes to a short sale transaction is to research thoroughly research the short sale realtor before listing your house with them. Ask for references, Google them, and check out any reviews that may have been posted. These days it’s even recommended to check out someone’s Facebook page to get some insight into what kind of person they are.
It’s also a good idea to avoid getting involved with facilitators that are unlicensed or if they want you to use a realtor that is controlled by them.
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