For instance, can the lender pursue the delinquent borrower after a short sale? And, if they can, how long do they have to come after the borrower? Is it six months or is it six years? You will hear both as an answer. What about the tax consequences? If you receive a 1099c from the lender for the debt forgiven will you (the borrower), be required to pay taxes on that debt? Some say yes, others say that you are protected by the â€œDebt Relief Act.â€ The truth is, â€œit depends.â€ Another concern regarding tax consequences are that the â€œDebt Relief Act,â€ has not been extended by congress yet, (and may never be). So, unless your short sale settles this year (for now at least), you may find yourself sitting on a huge tax liability.
Having said all that, the answer to your question (in its most simplistic form), can be addressed as follows:
I. Short Sales are sales that occur with permission of the sellerâ€™s lender when the seller has a loan on their home that exceeds the current market value, and they have received an offer from some buyer that is â€œshort,â€ the full amount that is owed on the property. It certainly is not a given that the lender will approve such an offer, but given the right set of conditions; lenders are approving short sales every day now. Generally, the lender must perceive the borrower has some hardship, (usually evidenced by the fact that the borrower/seller is not currently making mortgage payments). Generally, the lender must perceive the â€œshort sale offer to buy,â€ to be a reasonable offer price that fits into their guidelines for what they perceive to be a â€œgoodâ€ deal, (within the context of the current market values). Remember, if the lender isnâ€™t receiving mortgage payments from the home owner anyway, they may be better off accepting a short sale offer price (if it is fair and reasonable), rather than foreclosing, because forecloser can be expensive for the lender. Also, foreclosing doesnâ€™t guarantee the lender they will get a better offer. With that said, letâ€™s look at what is an REO.
II. REOâ€™s (also known as Real Estate Owned properties), can very often be Short Sales that didnâ€™t work. Maybe the home owner was not able to find an offer that was acceptable to the lender, or maybe the buyer who made the original offer changed their mind, or for whatever reason the short sale just did not happen. It is very often the next step of the lender to foreclose on the borrower. But, for whatever reason, when a lender decides to foreclose (mainly because the borrower defaults on the loan), ultimately, those are a type of property owned by a lender after repossession. Sometimes they will list that home with Real Estate Companies and make it available to the general public. That is an REO property.
III. A regular sale is simply that. It is a real estate transaction that does not involve the lender. At least it does not involve a lender to the extent that the lender must approve the transaction or to the extent that the lender is not the owner of the property due to a foreclosure. A regular sale is what people used to normally think of whenever a real estate sale or purchase was discussed. Generally speaking, the owner of the property does not owe more on the property than it is worth, and there are not liens on the property that will interfere with the sale of the property. If there is a mortgage it is an amount that is less than what the property is worth.
If you find any of this information useful, or confusing, or interesting please let me know. I would be delighted to answer any questions you may have or provide whatever assistance you may need in processing your real estate transaction.
I look forward to hearing from you soon.
Robert K. Peddicord
Real Estate Consultant
Prudential Americana Group, REALTORSÂ®
Direct: (702) 218-3974
E-Fax: (702) 317-3371
Email : email@example.com
Web : http://www.peddicordconsulting.com
871 Coronado Center Dr.
Henderson, NV 89052
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Realty One Group
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A short sale is where the seller owes his bank more than it is worth and must get their permission to accept less. This generally takes 4 months +.
A bank owned/REO/foreclosure has already taken the home back from the owner and you deal with the bank directly. This transaction takes 30 - 45 days.
A regular sale is an owner with equity and takes 30 - 45 days as well.
The first step as a buyer is making sure you have you loan lined up. Then you can begin to look.
I know some agents won't show a short sale, but I believe as you see what is available it will become clear what is best for you.
Give me a call or email and I will sit down with you to outline the steps and guide you through a success home purchase!
Thank you, Kelly Stafford
2. In a regular (standard) sale, a person is selling their home and will pay off the loan when escrow closes, and maybe even make a little money in the process. Terms of the sale such as price, length of escrow and helping with closing costs are all at the discretion of the seller in this case.
3. REOs are homes that are owned by a bank in most cases, because the previous owner lost the home in a foreclosure. Usually they are priced very cheaply. But they can have a lot of problems and you usually can't negotiate much. Often these homes are sold "as-is". But some of them are not in bad shape!
"The Landrove Team"
Keller Williams Realty Southern Nevada
2900 Horizon Ridge Parkway #101
Henderson, NV 89052