Real Estate Articles

REALTORS® share short sale tips

For homeowners who find that they owe more than their property is worth and are having a hard time keeping up with their mortgage payments, a short sale can be a viable option for avoiding foreclosure. REALTORS® advise distressed homeowners to consult a qualified real estate attorney and tax advisor to see if a short sale is a good option for them.

A short sale is a sales transaction for which a seller's mortgage lender voluntarily agrees to accept a loan payoff of less money than what is owed on the mortgage loan. According to the California Association of REALTORS®, short sales can play an important role in California's economic recovery by accelerating the pace of home sales and reducing the inventory of bank-owned homes on the market. Homebuyers who can qualify for a mortgage at today's low interest rates also are able to purchase a home at below-market prices. Banks get a nonperforming asset off their books and avoid the headaches associated with disposing of assets they don't want to own in the first place. Neighborhoods have fewer abandoned homes, and local businesses have more customers with money to spend.

The Silicon Valley Association of REALTORS® shares five tips from the California Association of REALTORS® for homeowners considering a short sale:

1. Don't assume you have to sell your home and move: check about other options. Do you really prefer to keep your home if your payment could be made more affordable instead of selling? If so, you should call your loan servicer - the company that sends you your mortgage bill every month. Ask them about any loan modification programs you may qualify for.
    
2. Document your financial hardship. Lenders are much more willing to forgive debt for homeowners who have been hit with an unplanned hardship such as job loss or medical emergency. Get your paperwork together so you can make a case for any debts you are unable to pay back to be forgiven.
    
3. Be sure you review the terms approved by the lenders on your short sale: and don't be afraid to say "no" later in the process. In a short sale, you often won't know the final terms offered to you by your lenders until long after you have selected a REALTOR® and listed your property. Be aware of this timing issue and be sure to review the final short sale terms approved by your lender or lenders before closing the transaction.
    
4. Ask about relocation support. Some loan servicers have special programs and offer financial support for relocation in the context of a short sale.
    
5. Check with your tax advisor. Even if you don't have one, check with someone to ensure your do not have a bad tax surprise caused by debt forgiveness. In some cases it is included as income on your tax return. This is particularly true for anyone who refinanced their loan and pulled cash out in the past, or took out a home equity line of credit.

For more tips and information about short sales, visit C.A.R.'s short sales website at www.shortsalescalifornia.org/consumers/.

The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please email or call the SILVAR office at (408) 200-0100.

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