what is a short sale?

Asked by flowergirl46806, Liberty, NC Wed Jan 16, 2013

husband has accepted an offer on a new job ...we will move from Indiana by Mar however we have 2 homes to sell here

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Jennifer Hill, Agent, Wilmington, NC
Thu Mar 20, 2014
Hi, flowergirl46806! The others have given you some great advice! I happen to be an employee of Cone Health and I am also a local Realtor. If I can be of any assistance or if you have any questions, please do not hesitate to contact me. Hope to hear from you soon! Jen Hill, Realtor, BHHS Yost and Little
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I also live in Julian, NC which is in the same general area as Liberty, NC. Just thought that to be ironic.
Flag Thu Mar 20, 2014
flowergirl46…, , Liberty, NC
Thu Jan 17, 2013
What valuable info Andy Matejka . It seems that it will be an interesting experience if not dreadful...may be both! We are both gainfully employed here in Indiana ...perhaps talking to our Mortagage lender should be our first step.My husband is not transferring from same employer or field of work but for triple his income. YAY! As for me I haven't yet searched for ...any hospital will do that is hiring
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THere are several fine medical institutions in this area....Greensboro (Liberty is a suburb) has Moses Cone Hospital and Wesley Long. Forsyth County also has Novant Health which has a property on the Forsyth/Guilford County line.

You want to be sure your mortgage lender ( i would be happy to assist) is licensed in NC as well. (not to knock your local 'go to guy')
Flag Thu Jan 17, 2013
Andy Matejka, Mortgage Broker Or Lender, Greensboro, NC
Thu Jan 17, 2013
Purchasing a short sale while relocating is a "horse of a different color", so they say; especially with the 2 homes you own in Indiana.

Do you have a transfer from same employer so that your new job will be one that qualifies you to purchase a new home?

YOu will certainly need to interview enough lenders to be certain you can purchase once you relocate.

--there are guidelines defining "stable employment" that are unique and subjective
--there are LTV requirements for your other 2 homes (generally speaking, if you have 25% equity you won't have too much difficulty as long as your income from the new job is enough to make all 3 mortgage payments and you have enough reserves (6 months for each property)

Upon meeting those requirements, you may not want to sit around here and wait for the selling banks' weekly roundtable to consider accepting your offer.

Rates could be heading higher later this year and with inventory becoming in shorter supply you will see your buying power diminish near the latter part of the year possibly.
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My NC Homes…, Agent, Chapel Hill, NC
Thu Jan 17, 2013
A short sale is when the Seller is selling their home for less than the amount they owe the bank. You should know that the vast majority of short sales are not approved by the lender because the Seller has the ability to pay off the difference.

Short Sales require the Seller to prove hardship and that they truly have no assets at all (this includes 401K's or other retirement funds, stocks, money in the bank, or other valuables that could be liquidated.

You should also know that unless you engage an attorney to assist you, that you will receive a 1099 for the amount you shorted the bank. For example you owe $200,000 on your mortgage, the bank agrees to allow you to sell the home for $165,000 You will get a 1099 for $35,000 and will be responsible for paying the taxes on this as if you had been paid it. In addition the bank will file what is know as a deficiency judgement. which is a personal lien on you and your husband for the $35,000 so that if you ever want another mortgage you'll need to pay them first. In North Carolina these are good for 10 years and can be renewed indefinitely. It won't matter what state you live in, these deficiency judgement are on your credit record. With an attorney you can probably avoid this and may be able to avoid the 1099. North Carolina is an extremely bank friendly state and seems to care much more about the banks than it's own citizens.

Buying a short sale is extremely difficult, the list price means absolutely nothing, it's an arbitrary price made up by a Seller (most of which have never spoken to their lender) and means nothing.
While the Seller signs the contract their signature counts for nothing, as the sale has to be approved by their lender and as I've already written most are not. You need to plan on 2-6 months to even get a response from the bank as to whether they might accept your offer or not and understand that they may want to renegotiate the terms. The only exception to this is if the property is clearly marked as an approved short sale, in other words the Seller has already been approved for a short sale. Here in NC this accounts for less than 5% of all the properties I see listed as short sales. My own advice is to avoid them like the plague.

Hope this helps you understand them a little and I wish you all the best.
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Thank you so much . I don't recall that it was an improved short sale..hmmm
Flag Thu Jan 17, 2013
flowergirl46…, , Liberty, NC
Wed Jan 16, 2013
Thanks for the info but I saw a home that is for short sale that I like in NC...is the purchasing process more difficult?
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Shanna Rogers, Agent, Murrieta, CA
Wed Jan 16, 2013
Hi flowergirl46806,

A short sale is when you sell your house for less than what you owe on it. Your lender(s) have to approve the short sale since they will be taking a loss. You have to have a provable financial hardship - your move for a job will qualify. Contact a local Realtor to assist you and talk to a CPA and Real Estate Attorney to discuss possible tax and credit ramifications.

Shanna Rogers
SR Realty
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Actually it is a home in NC that is being sold as a short sale...ty for the info...how is it handled , meaning the purchase? is it more difficult?
Flag Wed Jan 16, 2013
Andy Matejka, Mortgage Broker Or Lender, Greensboro, NC
Wed Jan 16, 2013
Congrats on your decision to move closer to Tobacco Road and ACC basketball country!

* a little hoops humor*

Is there any chance you can sell your homes for at least what you owe?

Have you considered placing tenants in there?

Short sales could have very detrimental impacts on your ability to obtain a mortgage in the near future depending on terms and such.

Good Luck and welcome!
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