Can I Short Sale If I Have Substantial Assets & Good Income?
I just had an appointment with a seller who want to short sale some properties. It was an interesting situation that I want to share with
you.
They bought several investment properties at the peak of the market. The homes have dropped in value by almost 40% and they losing money on the rent every month.
They are sick of writing a check every single month to cover the loss. They would like to short sale these properties if possible. They were wondering if the banks would accept a short sale?
Here was our answer. There is no answer that is correct 100% of the time. In there situation, it depends on your lender. Many lenders will allow a short sale.
Others won’t talk to you until you are behind on the payments. We have had clients in this situation very similar to yours and is short selling several properties.
He has substantial assets and a good income. Some of the banks were easy to work with. He was able to stay current on the payments until they approved the short sale.
However, some of the other banks weren’t as easy to work with. He had to stop making payments before they would talk to him.
It all depends on the bank and how much you want to short sale. I know several people that write big checks every month just trying to stay afloat on their rental properties.
Our seller decided to attempt a short sale. It doesn’t cost them any money. I don’t see how you can lose. If they don’t approve the short sale, then you are exactly where you are at today.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at [email protected] I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 865-696-9002
How To Avoid Any Surprises When Selling A Knoxville Short Sale
Many agents and buyers are scared of short sales in Knoxville. Here is something that I do to make the short sale process easier for the home seller.
Before I start negotiations with your lender, I will order a complete title search. Here is why I do that. I want to know all the costs upfront, before I give the bank a number.
If I don’t do this, then the short sale lender will approve the short sale at a certain price. We can get to the closing table and discover there are unforeseen costs.
Then we have to go back and re-negotiate with the short sale lender. This can be tough because they already have a higher number in mind.
Sometimes you have to start the short sale negotiations all over again. That can delay the short sale by 2-3 months, if not longer.
This trips up many agents and causes them to bad mouth short sales. Extra costs can show up in the form of higher than expected Homeowner’s Association Dues, Property Taxes, and other costs.
The title company will do a complete title search. They will get an estimated payoff from the Homeowner’s Association, and estimate the payoff for the taxes.
Since I take this pre-caution I have found short sales to be easy and fun. Before you hire a short sale agent, ask them about the short sale process. If they don’t mention this step, then find another short sale agent.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Send me an e-mail at [email protected]. I will contact you for a free consultation.
When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at 865-696-9002
Short Sales..Why Won't My Realtor Show Them To Me?
I was contacted the other day by a frustrated buyer who was interested in buying a short sale. She had an interesting question….
Here is Tamra’s question. “I am looking to buy a home. Some of the best priced properties are short sales. However, my agent won’t show me these homes.
She keeps on telling me the prices are lower than the lender will accept and that short sale never close. What should I do? I am really interested in these homes, especially at the price they are being offered at.”
Here was my answer. Tamra, you should talk to your agent and see what they dislike about short sales. Your agent may have had a bad experience with short sales in the past.
Short sales are a great way to purchase a home at a good price. They are tougher and take a lot longer than your average real estate transaction.
However, that doesn’t mean you shouldn’t consider them. Just be cautious with your search. Make sure the agent who has the house for sale has prior short sale experience.
Your agent can ask them what short sales they have sold in the past. If they or the people working with them have a good track of working with the banks, then you should be ok.
Remember, not every short sale is going to be approved at the listing price. But, if they banks feel the price is fair, then they will accept the offer.
So go look at some of those short sales. With a little luck one of them will be the perfect home that meets exactly what you are looking for.
If you are interested in buying a short sale give me a call. They can be a very good value and as long as you understand the process it can be worth the wait. Call me at 865-696-9002 or email me [email protected]
Need Help With A Loan Modification?
Loan Modifications are tough. Lenders don’t want to reduce your payment or reduce the amount you owe.
Most loan modifications end in failure because the banks are so hard to work with. In a recent story in the news, a New Jersey Company is accused of defrauding homeowners out of thousands of dollars.
According to the story, one couple had more than $2,800 billed to their credit card but received no loan modification. Another customer paid more than $3,500 and received no assistance.
Your best bet for a successful loan modification is to negotiate it yourself. No one else is going to care as much as you. After all, whose house hangs in the balance?
We will help you get all the information together in order to complete the information you need for a loan modification. This is a free service that is offer to you it will cost you nothing maybe a few cups of coffee while we are meeting. Our goal is to help troubled Knoxville homeowners who may be facing foreclosure avoid it. You do have options and we are here to help you and make sure you understand all your options.
My first goal is to help you stay in your home if at all possible. The information you will need to do a successful loan modification is very similar to what you would need to do a short sale on you home. It is a packet of personal information about you and your situation. When it is put together properly and presented correctly to your lender we have had people be successful getting loan modifications. So if you want some help and want to take advantage of this service we offer to homeowners in the Knoxville Area. Contact me
Don’t lose your home to foreclosure call me at 865-696-9002 or email me [email protected]
Can You Get A Short Sale Closed In Knoxville?
Are short sales in Knoxville impossible? Well, short sales are not impossible. They just take time. Here is an example.
We were attempting a short sale on a property. The bank turned down an offer for $195,000 on the house.
Today it looks like an offer for 185k will be approved. Why is that? The first offer was submitted 4 months ago.
The bank did an appraisal. The appraiser thought the house was worth $265,000. The lender rejected the offer because it didn’t meet their guidelines.
We put the home back on the market and waited for another offer. The property values continued to decline. The next offer came in for $185,000 several months later.
The bank re-opened the short sale process and ordered a new appraisal. This appraiser thought the house was worth $197,000.
The bank approved the short sale offer. As you can see, short sales can get approved with a little luck, time, and persistence. With some luck, the bank will see that the short sale makes financial sense and approve it.
We’ve seen over 85% of our short sales sell, get approved, and close in 3-4 months. And that’s the first attempt at negotiations.
The majority of the remainder will get approved, but we will have to submit more offers.
Having trouble making your mortgage payments want to know your options? Let’s setup a time to meet and talk about your situation. You have solutions available to you other than foreclosure.
As a trained Realtor with the CDPE designation I can help you avoid foreclosure. My team and I help more homeowners than anyone else in the greater Knoxville area solve their housing crisis. We are up to date on all the different solutions and changes going on in the market place.
Our assistance to you is at no cost to you. Give me a call at 865-696-9002 or email me at [email protected]
Will I Owe Income Tax After I Sell My Knoxville Home On A Short Sale?
This is one of the first questions potential short sale sellers ask us. “I heard of something called “forgiveness of debt income and that it is taxable. How does that work?” they ask.
In most cases the answer is that a short sale will usually not cause you to owe income tax.
It used to be that you owed income tax on any forgiveness of debt.
When a lender decides to forgive all or a portion of a borrower’s debt, the forgiven amount is considered as income for the borrower and is liable to be taxed.
Here are the following ways you can qualify to short sale a property without any tax liability.
Short Sale of a Primary Residence. The Mortgage Forgiveness Debt Relief Act of 2007 (and it’s extension in the 2008 Federal Bailout) now allows you to short sale a primary residence without any tax liability.
Today when a homeowner short sales a primary residence, they can file a simple form and the forgiven debt is no longer taxable.
The amount of forgiven mortgage debt allowed to be excluded from income tax is limited to $2 million per year.
Short Sale of a Non-Primary Residence: If the property you are selling is not a primary residence, then you may be eligible for tax relief if you are considered insolvent.
I don’t know the exact guidelines, but insolvent is usually considered when your total gross debts are more than your total gross assets. I’m sure a good tax professional can give you more information.
Click here to view the IRS’s website about the Mortgage Forgiveness Debt Relief Act and Debt Cancellation.
Click here to view the article on the IRS’s Website: Mortgage Workouts Now Tax-Free for Many Homeowners.
If you are having trouble making your mortgage payments you do have options other than foreclosure that won’t cost you a dime….Contact me for a free consultation let’s setup a time to talk about your situation and we can explore your options. Call me at 865-696-9002 or email me [email protected]
GMAC Short Sale Who Really Approves My Short Sale?
We recently started working on a short sale for one of our sellers their original loan was with GMAC. Our seller wanted to know who is really going to approve the sale on his home? That is a very good question and it really depends who is truly in control of that loan.
GMAC, was the financing arm of General Motors. It was taken over by Uncle Sam and has been mostly privatized as Ally Financial.
However, many people still have loans from the original GMAC. Some of these homeowners want to short sale, but are curious about how it works.
Most of GMAC’s loans have been sold. The first thing we do is to find out who really owns the loan and who is going to be calling the shots once we have an offer on the home.
On our last GMAC short sale, the loan had been sold to a Wall Street “Sliced and Diced” Fund. In this case, that fund made the decision on whether or not to accept the short sale. GMAC was simply handling the file for them.
Another owner of loan might be Fannie Mae or Freddie Mac, both highly controlled by Uncle Sam.
Or, the loans might be owned by a private investor, but insured by VA or FHA. The guidelines to approve a short sale will be set by the owner or insurer of the loan.
For example, FHA allows a homeowner 120 days to successfully short sale their house. FHA will accept a net equal to 88% of an FHA appraisal for the first 30 days.
After 30 days, that number is reduced to 86%. After 60 days, it is reduced again to 84%. So yes, Bank of America short sales are tough.
However, if you know who the investor (or insurer) is on a loan (and their guidelines), it makes it much easier to get a short sale approved. Fannie Mae, Freddie Mac, FHA, and VA own or insure between 60% and 75% of all loans.
If you are thinking of doing a short sale, then make sure your agent understands their guidelines. Their guidelines are all a little different.
Thinking about a Knoxville short sale? I can help you we have the most experienced team in Knoxville in getting them done. And it won’t cost you a penny our services are free…Give me a call at 865-696-9002 or email me [email protected]
Discover how other Knoxville sellers successfully completed a short sale
Rent Your Home Or Sell It On A Short Sale?
I received a call from an owner who used to live in Knoxville but was transferred because of his job. He couldn’t afford to sell his home at the time because he was upside down. He couldn’t afford to carry two households either. Here was his question to
me…
“Rick when I moved from Knoxville to Nashville because of my job transferred. I couldn’t afford to sell my Knoxville home because I was upside down. But I also didn’t want to do a short sale on the home. So I decided to rent it. Well the tenants moved out and trashed the place. I could rent the house out again, but I would have to spend several thousand dollars fixing it up first. What would you recommend that I do?” Chuck asked.
Here was our recommendation. That is a tough situation. You could fix up the house and rent it out again. But, you risk having the same thing happen all over again.
Here is the other problem. The amount you can charge for rent has gone down in most areas around Knoxville. This means you will probably have to write a check every month.
If you are able to rent it and cover all the costs, then I would recommend you keep the home.
Here is why I recommend that. If you can break even, then the house will be a good investment as the Knoxville real estate market recovers. However, you will always risk large unexpected costs like the one you are experiencing right now.
If it the rent does not cover all the costs, then more than likely you are in an area where the housing prices are still dropping. This means the burden will only get bigger as time progresses.
Hire a good property manager this time instead of taking care of it yourself. They will do a complete background check on the tenants. That way you limit the chances of something like that happening again. if you need some recommendations let me know an I can refer you to some good companies who can help you out.
Renting you home is just one way to avoid foreclosure if you are upside down on your home. If you are having troubles making your mortgage payments and want to know your options call me at 865-696-9002 or email me [email protected]
What Do I Do If My Realtor Has Never Done Knoxville Short Sale?
I got a phone call from a Knoxville homeowners asking about selling her home on a short sale. She had her home for sale with another agent. Here was her question to me
“I have had my house for sale for a little while, but it hasn’t sold. No buyers have come to look at it. At first I thought the price was fair. But, now that no one has come to see the home, I am beginning to realize that I am upside down. I need to sell because i have lost my job. My realtor hasn’t talked to me about a short sale. What should I do?” Jennifer asked.
Here is what I would recommend to her. First, talk to your current agent about a short sale. The might be uncomfortable with bringing it up.
Short sales are a sensitive issue. Some people get offended when you ask them about a short sale. It doesn’t look like that is the case with you.
Tell your agent that you think you might be upside down. Ask them what they think they can realistically sell the house for in today’s market.
Then, ask them for a “Net Sheet.” This is a sheet that details all of the costs and fees associated with selling a home.
The fees and costs are subtracted from the sales price to give you the net amount you will receive from the sale. Compare that number with your mortgage payoff.
If it is less than what you owe your lender, then you will need to consider a short sale. Ask your agent if they can handle your short sale.
If not, then you may need to hire someone else. Short sales are a lot more complex than a normal real estate transaction.
Make sure the person you interview has closed short sales in the past and knows what they are doing.
Ask them how the short sale process works. Have them explain it to you. This will help you determine if that person can do the job for you.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny.
Send me an e-mail at [email protected] or call me for a free consultation at 865-696-9002. I will explain all your options to avoid foreclosure I have the most experienced Short Sale Team in Knoxville and we can get your home sold for you.
Getting Divorced ..Should You Sell Your Home On A Short Sale
If you are getting a divorce and neither one of you can afford the payment on your own. Then I would suggest you sell your home. Now, if you are reading this blog, then you must be researching a Knoxville short sale.
Which means that you are probably upside down on the home. You have three options.
Option #1: Let your lender foreclose on the home. You just stop making the payments and surrender the home to your lender.
Option #2: Short Sale the house and get the debt wiped out. A short sale offers the following benefits over a foreclosure.
Issue: Can I get a Future Fannie Mae Loan?
Foreclosure: The current Fannie Mae Guidelines require you to wait 5-7 years before you can buy another home with a Fannie Mae Loan. Most other banks and lenders have the same or even stricter procedures.
Short Sale: If are back on your feet 2 years after the short sale, then Fannie Mae guidelines allow you to get a loan from them.
Issue: Can I get a future loan from any mortgage company?
Foreclosure: Any future application will require you to answer the question, “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” you’ll have to answer that question yes.
Short Sale: You can state “No” because you short sold your home. You only have to say yes if the bank completes the foreclosure.
Issue: Credit Score Impact.
Foreclosure: Your score is typically lowered by 250 to 300 points, or even more. This often stays on your credit score for over 3 years.
Short Sale: Only late payments show up. After a short sale, the mortgage is normally reported as “paid in full, settled.” This lowers your score as little as 50 points if all other payments are being made. Oftentimes, this is off your credit report in as little as 12 months.
Issue: Will I owe the bank any money for the shortfall?
Foreclosure: Many lenders take 6-12 months to foreclose upon a property and resell it. This dramatically increases the loss and makes any deficiency judgment potentially bigger.
Short Sale: Few lenders ask for a promissory note on a short sale. As an example, on one short sale, the bank lost over $120,000. They settled with the seller for $15,000 to be repaid over 8 years with zero interest. The seller’s monthly payment was only $178.57. It is rare in our short sales that our sellers end up paying anything back to the bank
Option #3: Rent the property. This is a good way to earn some extra money. However, if you are upside down, then it is more than likely that the rent will not cover the mortgage. That means someone will have to write a check each month covering the loss.
Thinking about a short sale? I can help you short sale your property and never pay the bank another penny. Give me a call at 865-696-9002 or email me [email protected]
Discover how other sellers successfully completed a short sale. You do have options other than foreclosure I will explore them all with you
