A "short sale" is something that has become well known over the last few years as home values decrease and many homeowners face financial difficulties. "The term 'short sale' means that during the sale there is more debt owed against the property than the property's value. In other words, the property is "underwater"
It has been reported that in Tuscon there is a rising number of foreclosure filings and this number is only expected to continue growing in the future. Almost all of the neighborhoods in Tuscon have seen a rise in foreclosures and properties being sold as short sales. In some areas of Tuscons 40% of the total housing inventory is compromised by short sales. This shows that all inventory may be impacted even the inventory that is not distressed.
In a short sale real estate transaction it is important to understand who is in charge of what:
- The primary people in a short sale real estate transaction is the homeowner and the mortgage company. The home owner must talk with the loan servicers about their situation where they will need to provide the necessary documentation of financial distress. Overall the goal of the mortgage company is to keep the homeowner in the home. A short sale is typically the last resort. If phone calls and emails are ignored from the lender this will leave little choice but to proceed to a foreclosure action.
- If a foreclosure process begins it will become more difficult to work out a possible solution with the lender. When there is a situation that the process advances to the "Notice of Trustee's Sale" stage, there is less time to market the property for sale which makes it a challenge to obtain as close to fair market value for the property as possible. This is particularly true in areas where properties are moving slower, such as areas like Tucson.
- The second key person in a short sale is the tax professional and/or financial advisor. It is important to have a disucssion concerning the potential tax consequences and you need to make sure the tax professional you are using is up to date on the current tax law.
- The homeowner also needs to work with an attorney to explain the laws related to the release of fliens or mortgage debts.
It is extremely important to work with a professional Realtor during these types of situations. Century 21 Beal, Inc. has many wonderful Realtors to work with who have a strong understanding of all this information.