Short Sale FAQ’s
Short Sale FAQ’s for Sellers who need to know
Colorado Springs Short Sale Agent answers FAQ's
Question: 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?
Answer: No, you don’t. If you are unable to make your payment and you are “under water”, you qualify for a short sale.
Note: “Under water” would mean your total debts are greater than your assets or income. Lenders prefer to avoid foreclosure when possible because foreclosure is a more expensive procedure, which is more costly, for the banks than a short sale.
Question: I have a VA loan. Will I lose all the equity in my home if I do a short sale?
Answer: Yes. The VA wants to sell your home for as much as possible based on its current market value to pay off the loan balance owed. The equity you have acquired over time or through upgrades, is lost in the process because all proceeds from a short sale are applied directly to the VA mortgage loan amount.
Question: Do I have to pay income taxes? Will the lender still send me a 1099 so that the loss the bank takes will be treated as a taxable gain to me?
Answer: No, this is no longer true. President Bush signed into law the Mortgage Forgiveness Act that will be in effect until 2012, waiving taxation on any 1099 amount from the lender. Contact your Tax Attorney or Qualified CPA to make sure that this will apply to your situation. With the passing of the Mortgage Forgiveness Act in 2008, most people who do a short sale in order to sell their home will not have to pay taxes on the forgiveness of any deficiency amount. This law does expire at the end of 2012 – so if you think you are going to need to do a short sale – sooner is better than later!!
Question: How will you, my listing agent get paid? Who pays the commissions and closing costs associated with the sale of my home?
Answer: As your Colorado Springs Short Sale Agent, I will request that your lender, the bank, pay the following; commissions due, all your seller closing costs, any seller back owed property taxes,your seller’s HOA dues, any second lien amounts, and any buyer incentives that are agreed upon in the contract. You, as the seller will not be asked to pay anything. My Colorado Springs Short Sale Agent services are free of charge to you, even if the lender does not pay the commission due.
Question: I want to do a short sale, but I have a second mortgage; does this make me ineligible to short sale my home?
Answer: No, it does not make you ineligible. Both of your lenders will need to be satisfied in order to complete the short sale. If your first lender agrees to the amount that will be paid off by the sale thru the negotiation process, we negotiate acceptable terms with the second lender simultaneously as well. Most short sales do involve 1st and 2nd lien holders – and some will even have 3rd liens or mechanic liens or tax liens that need to be addressed.
As your Colorado Springs Short Sale Agent, I can help with more questions – so feel free to email me at Info@AngelRealtyGlobal.com or call me directly.
