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Short Sales In Orlando Florida Series – Lesson 4 – Personal Considerations
Short Sales in Orlando Series overview
In Lesson 1 the definition of a short sale was established. The homeowner negotiates with their lender to sell the property less than what is owed. If the lender agrees then you have a short sale. Although the definition is very simple, the process and results are quite complex. Complex in terms of time, guidelines, negotiations, paperwork, parties involved, closing, patience, and emotions. We will begin to simplify the complexities of the short sale. In Lesson 2 we walked you through the foreclosure process in the great state of Florida. In Lesson 3 we discussed the lender short sale process. It is critical to have a basic understanding of the processes to have a successful short sale.Short Sale Personal Considerations in Orlando FloridaNote: This article describes the short sale process in Florida. Because the foreclosure and short sale process are closely connected, please be sure to understand your state foreclosure process and laws. The short sale process will be slightly different based on the foreclosure process in your state.Although the short sale sounds like a viable option for homeowners under water (they owe more than what the house is worth) or heading into foreclosure, there are several key personal ramifications to consider. This is not meant to be taken as legal advice but instead to educate you so you can investigate further so you to make an informed final decision.The impact on your credit is usually the first question on homeowners’ minds. Lets compare a foreclosure and a short sale.Foreclosure credit impact:
Short Sale credit impact:
Make no mistake a short sale will not eliminate the negative impact to your credit but is certainly a more positive alternative to foreclosure. A responsible homeowner can quickly recover their credit rating with a short sale but has very little chance of quick recovery with a foreclosure.Now that you understand their will be an impact to your credit using a short sale, the following are additional considerations with a short sale.The Deficiency JudgmentA Deficiency Judgment is the difference of what is owed and the amount sold. For example, 200k is owed and it sells for 150k. The deficiency is 50k. The lender has the option to place a Deficiency Judgment on you up to the full amount. A skillful negotiator will have the entire Deficiency Judgment waived. If the lender refuses to waive the deficiency (numerous reasons why) a skillful negotiator will negotiate much less than the full amount with favorable terms (0% interest). At this point you have a personal decision to make. Do you accept the Deficiency Judgment which becomes a promissory note to repay the deficiency or do I let the house go to foreclosure or even bankruptcy. Again this is a very personal decision but you must choose wisely if the deficiency is not waived and especially if you choose bankruptcy.1099If the Deficiency Judgment is waived the lender has the option to file a 1099 IRS form. So lets take our example of a 50k deficiency. The lender waives the deficiency so the good news is that you don’t owe the lender 50k. But if a 1099 is filed, the IRS, in a warped way, considers this as income to you which you will owe taxes on. So if you’re personal tax rate is 25% then you will owe the IRS 12k in taxes on that 50k. But there is good news, President Bush signed the Mortgage Relief Act of 2007 which waives all 1099s through 2011. One criteria is it has to be your primary residence, so investment, vacation, or 2nd home properties do not qualify for this exemption. If you qualify for the exemption then a simple IRS form needs to be filed along with taxes. If you don’t qualify for the exemption there is still hope. You will need to consult with your CPA or tax adviser how you can wipe out the taxes owed.One more important consideration to keep in mind is if the lender forecloses they still have the option to pursue a Deficiency Judgment. So not only do you have a devastating foreclosure on your record but your credit report will show you owe the bank a deficiency judgment. That is what I call a double whami!!Your TimeHow much time can you commit to the short sale process? Many days you will be on-hold with the bank waiting to talk to the person assigned to your case. How much time can you commit to get your house ready to be sold? How much time can you commit to talk with potential buyers? How much time can you commit to coordinate the closing? A normal short sale will demand up to 300 hours of your time spread out over months.Your SkillsTo have a positive outcome you will be required to be skillful in numerous areas. The ability to skillfully negotiate with lenders and buyers is a must. Time management skills is also a necessity. Organizational skills is required because you need to have paperwork available at a moments notice and ability to recall previous conversations. People skills is a must. You will be dealing with all kinds of personalities and must be able to adjust accordingly. If you are a person lacking people skills you will struggle in this process.Your EmotionsHolding your emotions in tact is a must. Because this is a stressful situation your emotions will be tested. Your emotions will be influenced by your family, lenders, buyers, title companies, Realtors, the legal system, attorneys, customer service, interested investors, and you. If you let you emotions get the best of you may jeopardize the entire process.Before venturing down the short sale path, you must consider these personal considerations. If you are limited on time, emotions, and skills I highly recommend a 3rd party to work a short sale. An experienced 3rd party has a tremendous advantage over someone with no short sale experience. Also a 3rd party knows what it takes to find potential qualified buyers interested in below market properties. In addition an experienced 3rd party knows how to delay a foreclosure sale date, are you? Our services are at no cost or fees to homeowners. We are experienced in short sale negotiations and will work very hard on your behalf to get your deficiency judgment waived. If at any time you feel we are not providing a quality service we will stop working your case and not ask for any compensation. So focus on dealing with your hardship and moving on with your life and let us deal with all the headaches of selling your house in these very tough economic times.Understanding personal considerations in a short sale is critical. You need to be aware of these considerations especially if you are interviewing potential 3rd parties. If they do not discuss the Deficiency Judgment or 1099 implications, are they intentionally not telling you or they are not familiar with these considerations? How committed are they with your case? The next Short Sales in Orlando Florida lesson we will next discuss some short sale myths.
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Short Sales In Orlando Florida Series – Lesson 2 – The Court System Process
Short Sales in Orlando Series overviewIn Lesson 1 the definition of a short sale was established. The homeowner negotiates with their lender to sell the property less than what is owed. If the lender agrees then you have a short sale. Although the definition is very simple, the process and results are quite complex. Complex in terms of time, guidelines, negotiations, paperwork, parties involved, closing, patience, and emotions. We will begin to simplify the complexities of the short sale.The Foreclosure Process in FloridaNote: This article describes the foreclosure process in Florida. Because the foreclosure and short sale process are closely connected, please be sure to understand your state foreclosure process and laws. The short sale process will be slightly different based on the foreclosure process in your state.In order to have a positive outcome using the short sale option, one must first understand the Florida foreclosure process. Many folks are terrified of the court system. Who is to blame them with judges, lawyers, court houses, and legal jargon (legalize). The first step to reduce the fear factor is to be knowledgeable of the court system foreclosure process and understand some of the terms involved.Typically after 3-4 months of not making payments to a mortgage lender, the lender will file Lis Pendens against the borrower. This marks the beginning of the foreclosure process in the state of Florida. At this point the lender’s attorney is involved and begins to file all the legal paper work. One paperwork requirement is to serve all the defendants of the case. When you are served make sure you follow the instructions to respond to the summons. When all parties have been served Lis Pendens then a Notice of Hearing is scheduled or known as the Hearing Date. On the Hearing Date, the assigned judge will hear both plaintiff and defendant of the case. The outcome of the Hearing Date is to schedule a Sale Date on the property. The plaintiff is represented by their attorney and the attorney will request 30 days to set the Sale Date. The judge will turn to you and listen to your story. You may or may not be represented by a lawyer. Odds are if you are in foreclosure you cannot afford a lawyer to represent you. You present your case to the judge and request for as much time as possible to make amends with the lender. You must tell the judge you are working a short sale with the lender and you need additional time to close your buyer.Once plaintiff and defendant present their case, the judge will determine the Sale Date. Depending how well you presented yourself to the court, this will determine how much additional time you receive to sell the property. If you do not appear at the Hearing then the judge will set the Sale Date in 30 days.The Sale Date is the day your house goes to auction. This typically occurs on the court house steps and your house will be auctioned off. The lender may or may not find a buyer. Either way you have less than a week to vacate the property. So be prepared with a plan to move to another home which will be discussed in another lesson. In summary the foreclosure process has a few major steps. Lis Pendens, Hearing Date, and Sale Date. The main point when dealing with the court system is to respond quickly and responsibly. This is where many folks fail in the short sale process. You must present yourself as a person who has a hardship and you are working with the lender to resolve the loan default. The court system looks favorably on folks being responsible and for the most part will have sympathy for the homeowner. The banks were bailed out, so why can’t you also get a bail out utilizing a short sale. We will coach you through the foreclosure process and hearing in front of the judge. Our services are always free to homeowners facing foreclosure.Now that you have a base understanding of the legal foreclosure proceedings, the next Short Sales in Orlando Florida lesson we will next discuss the short sale process and how it fits in with the legal process.Foreclosures are occuring in these surrounding locations of Orlando FloridaAltamonte Springs | Apopka | Avalon Park | Bay Lake | Belle Isle | Edgewood | Lake Buena Vista | Maitland | Ocoee | Orlando | Winter Garden | | Waterford Lakes | Winter Park | Eatonville | Oakland | Windermere | Azalea Park | Bay Hill | Bithlo | Christmas | Citrus Ridge‡ | Conway | Doctor Phillips | Fairview Shores | Goldenrod‡ | Gotha | Holden Heights | Hunters Creek | Lake Butler | Lake Hart | Lockhart | Meadow Woods | Oak Ridge | Orlo Vista | Paradise Heights | Pine Castle | Pine Hills | Sky Lake | South Apopka | Southchase | Taft | Tangelo Park | Tangerine | Tildenville | Union Park | Wedgefield | Williamsburg | Zellwood | Plymouth | Reedy Creek Improvement District‡ | University Park | Vineland | Altamonte Springs | Casselberry | Lake Mary | Longwood | Oviedo | Sanford | Winter Springs | Chuluota | Fern Park | Forest City | Geneva | Goldenrod | Heathrow | Midway | Wekiwa Springs | Kissimmee | St. Cloud | Campbell | Celebration | Citrus Ridge‡ | Lake Buenaventura | Poinciana | Ashton | Bull Creek | Deer Park | Harmony | Holopaw | Kenansville | Intercession City | Lake Marian Highlands | Narcoosee | Reedy Creek Improvement District | Yeehaw Junction
We Buy Houses Orlando Florida is now offering solutions to sell or save your home in this tough housing market. We are a professional company who works closely with homeowners and realtors searching for selling solutions in these tough economic times. You have more options available than you realize. You must be informed, have a plan, and take action. Please visit We Buy Houses or call 407-574-8775
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Short Sales ? It’s How To Avoid Foreclosure In Orlando Florida
Short Sales – It’s How To Avoid Foreclosure In Orlando Florida
With real estate values in Orlando Florida plummeting back to prices not seen since the late 90’s Orlando Florida area Homeowners are finding it impossible to “sell a home in Orlando Florida and payoff the mortgage.” Those not behind on mortgage payments have two choices. Wait several years until the Orlando market corrects then sell. Or, bring a BIG FAT CHECK to closing, pay down your mortgage, and hand the keys to the buyer. Obviously, for people current on their mortgage paying somebody to buy their house is not favorable. Considering foreclosure in Orlando is at an all time high, the number of people behind on their mortgage is staggering. If you are behind you can either suffer a foreclosure or attempt a Short Sale.
What is a short sale?
A short sale is when the Lender (the Mortgagee) agrees to accept as full payment an amount which is less than the actual mortgage payoff balance that is due from the Homeowner (the Mortgager).
Is there an advantage for the Homeowner to agree to a short sale?
As a rule, the homeowner cannot receive any proceeds from the sale of a house sold through the Short Sale process so why would they agree to it? Because a foreclosure will absolutely destroy your credit rating and in this day and age the availability of credit is everything. Without credit you can’t buy another home, you can’t buy a new car, and you can’t run to the grocery store if you’re out of food and money before payday. Most importantly a foreclosure will stay on your credit report for 10 years or more. A Short Sale will drop your credit score significantly but it is temporary and not as damaging to your credit as a foreclosure. In addition, it should drop from your credit report in 2-3 years.
What’s the advantage for a Lender to agree to a short sale?
The lender will agree to a Short Sale if and only if it makes financial sense. Let’s face it, banks are in the business of making money or they won’t be in business very long. If you’re behind on your payments and have low or even negative equity then it makes sense for the Lender to at least entertain an offer. Although there are numerous factors in the equation, what the lender really wants to know is can they come out ahead financially by accepting a Short Sale? Once proposed, they are going to do what’s in their best interest and hopefully that decision will benefit you the Homeowner as well.
When a bank has a non performing asset such as a house, and that house is not generating income through mortgage payments, the banks want and in many ways need that house off their books. To get that house off their books they have two choices. They can foreclose on the homeowner which can be a very lengthy and very costly expense to the bank with little or no possibility of recuperating those expenses from the Homeowner. Or they can accept a Short sale. So who should attempt a Short sale?
Is it possible for the homeowner to short sale their own home?
Possible? Yes. It’s also possible to win the Powerball too. A Short Sale should not be attempted by the homeowner. Why? Because when you are behind on your payments, each and every day that passes you are one day closer to a foreclosure auction. There is no room for error and there may only be one opportunity to get the lender to accept the discounted purchase price. There is much involved and little time do get it all accomplished. A short Sale is best negotiated by “a professional real estate team experienced in Short Sales.” That team consists of Negotiators, Appraisers, Inspectors, Real Estate Agents, Contractors, Surveyors, Attorneys, Title Companies, Mortgage Brokers, CPA’s and others that complete the team. It is unlikely the Homeowner will have these team players readily available and functioning as a well oiled machine. These professionals must work together to present your best case to the lenders Loss Mitigation Department in an effort to help you avoid Foreclosure in Orlando. A short sale is best accomplished through a local professional Orlando area home buyer.
On The Spot Home Buyer, LLC “Tell us about your Central Florida home for sale.”
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There is a solution to selling your house fast in today’s central Florida real estate market. On The Spot Home Buyer, LLC is a team of professional real estate investors that buy houses all over Central Florida in any area, any price range and in any condition. If you have an unwanted house you need to sell quickly for any reason whatsoever, call Orlando’s “We Buy Houses Guys” at 407-352-SOLD (7653). No equity? No problem!! At On The Spot Home Buyer, LLC we buy houses even if you owe more than it’s worth. Visit us today at OnTheSpotHomeBuyer.com for more information, to schedule a free, no obligation consultation or to get an offer on your house On The Spot!!
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