Short Sale Q/A
1. Do lenders come after home owners for deficiency on the loan after short sale?
Second lenders have a right to chase after deficiency. However, lenders don’t chase after them in most cases of short sale. It is very important to have a competent agent to handle short sale. The competent and knowledgeable agent can protect you from deficiency judgement and recourse loan.
2. 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 the seller? Is this true?
If the house you are selling is a primary residence, you may not pay any tax occurring on the sale of the house. If it is an investment property, you may also be able to waive tax. You need to consult with a qualified CPA for more details.
3. Will I still have to pay delinquent property taxes if I do a short sale?
No. Property taxes will always have to be paid as part of any accepted short sale. Lenders will pay the property tax in successful short sale.
4. What is the HAFA program?
HAFA means Home Affordable Foreclosure Alternatives. The HAFA program is set to begin on April 5, 2010. Not every home owner is qualified. It is important to check with your lenders. The benefit of HAFA is that home owners are protected from deficiency judgment from the first and second lender. Home owners who are qualified for HAFA also get up to $3,000 as a moving cost. HAFA is a wonderful program to protect home owners from lenders’ deficiency judgment.
5. Am I qualified for short sale?
Not all short sales get approved by the lender. However, if you choose an experienced and competent agent, your short sale will be approved all the time.
6. If it is a totally FREE service, how does my listing agent get paid?
The agent gets paid when short sale is successfully completed. The bank will pay the commission along with all the other usual closing costs.
7. What is the difference between the result of short sale and the one of foreclosure in terms of damage?
When your house is foreclosed, you may get deficiency judgment and you ruin your credit for 7 years or more. Foreclosure will remain as a public record on a person’s credit history for 10 years or more.
In contrast, when you short sale your house, lenders mostly give up the right to pursue a deficiency judgment against the homeowner. Your credit gets recovered in an average of 2 years. Short sale shows “Paid in full, settled” in your credit report.
If you have any questions, please feel free to call Sam or his staff, they will gladly answer any questions regarding your home with no string attached.
1. Do lenders come after home owners for deficiency on the loan after short sale?
Second lenders have a right to chase after deficiency. However, lenders don’t chase after them in most cases of short sale. It is very important to have a competent agent to handle short sale. The competent and knowledgeable agent can protect you from deficiency judgement and recourse loan.
2. 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 the seller? Is this true?
If the house you are selling is a primary residence, you may not pay any tax occurring on the sale of the house. If it is an investment property, you may also be able to waive tax. You need to consult with a qualified CPA for more details.
3. Will I still have to pay delinquent property taxes if I do a short sale?
No. Property taxes will always have to be paid as part of any accepted short sale. Lenders will pay the property tax in successful short sale.
4. What is the HAFA program?
HAFA means Home Affordable Foreclosure Alternatives. The HAFA program is set to begin on April 5, 2010. Not every home owner is qualified. It is important to check with your lenders. The benefit of HAFA is that home owners are protected from deficiency judgment from the first and second lender. Home owners who are qualified for HAFA also get up to $3,000 as a moving cost. HAFA is a wonderful program to protect home owners from lenders’ deficiency judgment.
5. Am I qualified for short sale?
Not all short sales get approved by the lender. However, if you choose an experienced and competent agent, your short sale will be approved all the time.
6. If it is a totally FREE service, how does my listing agent get paid?
The agent gets paid when short sale is successfully completed. The bank will pay the commission along with all the other usual closing costs.
7. What is the difference between the result of short sale and the one of foreclosure in terms of damage?
When your house is foreclosed, you may get deficiency judgment and you ruin your credit for 7 years or more. Foreclosure will remain as a public record on a person’s credit history for 10 years or more.
In contrast, when you short sale your house, lenders mostly give up the right to pursue a deficiency judgment against the homeowner. Your credit gets recovered in an average of 2 years. Short sale shows “Paid in full, settled” in your credit report.
If you have any questions, please feel free to call Sam or his staff, they will gladly answer any questions regarding your home with no string attached.