Home Buying in Duluth>Question Details

Elden Alvarez, Real Estate Pro in Duluth, GA

Can you buy a home right after a short sale????

Asked by Elden Alvarez, Duluth, GA Fri Oct 29, 2010

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Actually Richard I have closed two purchases recently that were short sales and the Seller was NOT late on their payments. Just needed to sell and relocate and could not get the proper sales price to pay off the mortgage and in both instances the Bank took the short sale. It took 6 months in one of these and 3 months on the other, but they were not late on their mortgage payments
There are people who are current on their mortgages who need to sell, but cannot get enough for their home to pay off one or both mortgages they got back in the 100% financing days!
0 votes Thank Flag Link Wed Jan 19, 2011
You can if paid for by all cash.

John
0 votes Thank Flag Link Tue Jan 18, 2011
A short sale will enable the seller to purchase a home about 2 years after a short sale completion while a foreclosure will make you wait 5 years. In addition, short sales are better for the lender and it will keep the house occupied, with water and electricity still on and also keep the lawn mowed. Plus the bank will lose less money through a short sale.

PROS
No Foreclosure - foreclosures can be a hard and stressful process for a family.

Being Proactive - facing a foreclosure head on will help give you some control over the process.

Start Newer, Faster - minimizing damage to your credit can help you and your family get back on your feet faster.

May not owe anything after the short sale - you can try asking the bank to cancel your debt altogether. It does happen, but not all the time. Primary residences are usually treated more favorably by the lenders.

CONS
There is still damage to your credit - when a short sale is done, it is still documented on your credit but won't have the same impact as a foreclosure for most creditors.

Tax Consequences - there may be tax consequences if the bank forgives the debit and will issue a 1099 to the IRS for the amount of debt forgiven.

Bank could demand payment for their loss - the bank doesn't have to forgive the debt. They are able to ask you to pay them back for the difference on the sale and what is owed, but you will need to agree to this.

There are no guarantees in a short sale - whether the bank will approve the sale or forgive your debt, but short sales offer a better alternative to minimize the downside of facing a foreclosure.

Disclaimer -There can be legal and tax consequences. You may want to consult with an attorney or tax specialist before attempting a short sale. A real estate agent cannot give you legal or tax advice.
0 votes Thank Flag Link Sat Oct 30, 2010
Yes it is possible in certain cases. It depends on the credit of the person who is doing the short sale and whether or not they were behind in their payments. There are some brokers out their who can get loans for people in these negative situations. It becomes very difficult and they will be facing much higher interest rates... So they might end up right where they started. Best bet for them is to rent for a couple of years and get their credit score worked on by a professional.
0 votes Thank Flag Link Fri Oct 29, 2010
That was my comment to the lender Lori. How many short sales have you seen lately where they aren't behind on their payments? I haven't seen any.
0 votes Thank Flag Link Fri Oct 29, 2010
Richard is correct in his answer, but how many people do a short sale that are current on their payments. If you were current on your payments, then indeed you can do a loan with proof of such. If, however you were late in your payments, you have a 3 year wait I am afraid.
0 votes Thank Flag Link Fri Oct 29, 2010
We have a lender that has managed to get short sale sellers into a home within a month or so of closing their short sales. So it is possible. I was talking to him about how he does it, and he said that the seller cannot be behind on the payments, and cannot have been late with any payments.
0 votes Thank Flag Link Fri Oct 29, 2010
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