does the seller make money on a short sale besides the lawyer?

Asked by Basilio, Miami, FL Sat Jun 14, 2008

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20
Robin Sing-C…, , Fort Lauderdale, FL
Sun Jun 15, 2008
I hate going back and forth on Trulia Vocies but Jim below is wrong. Having a Real Estate agent involved is NOT an advantage. In fact some banks (Ocwen) don't even want to deal with agents anymore. Whether you use an attorney an agent, or an investor, the most important thing is that the person has extensive experience in what they are doing and that they know what they are talking about. To say a realtor is an advantage is an advertisiment at best and erroneous at a minimum.

Secondly, which is very telling when one makes such statements..there is NO deficiency judgment when you successfully execute a short sale. The Mortgage Debt Forgiveness Relief Act refers to the issuance of a 1099 by the bank as the IRS looks at the amount forgiven as ordinary income.

The Mortgage Debt Forgiveness Relief Act eliminates this for foreclosures on primary residences ONLY.

A deficiency judgment is what the bank can seek if the property is taken back and resold and the amount of the proceeds is less than what the Final Judgment was.

It is very important that you understand that there is no Deficiency judgment when a short sale is accepted.

Like I said, I normally don't do rebuttal answers but in this instance the information you received was so wrong it could have caused you problems.

C'mon people..at least be honest and transparent when speaking to the consumer.
Web Reference:  http://www.robinashley.com
1 vote
Real Estate Brokers that have experience in dealing with the lenders are a great asset. It's doubtful most seller can understand the complexity of such a transaction. I have many years experience in doing short sales and it is important that the seller gets something in writing from the lender stating that they will not owe the difference . There is a process to this and only experience can successfully complete the transaction. Why wouldn't a seller use a broker. The bank pays the commission?
Flag Mon Jul 31, 2017
Not true if you cashed out refinance you may be subject to capitol gains taxation. Check with a tax professional. Check your sources. I am a realtor and they are the best resource to sell your home.
Flag Tue Oct 6, 2015
Jim Johnson, , 78233
Sun Jun 15, 2008
The answers so far have been largely correct. One alluded however that an agent was optional. Unlike private individuals who decide to go FSBO, lenders appreciate the value of agency representation, and require that a REALTOR list the property.

One other fact remains unmentioned. In a short sale, the debt is forgiven. The Mortgage Debt Forgiveness Relief Act then provides that the forgiven debt not be taxed as income. The benefit in this, unlike many foreclosures, is that the lender does not seek a deficiency judgment against the debtor.
1 vote
Amit Bhuta, Agent, Coral Gables, FL
Sat Jun 14, 2008
No. The lender doesn't allow the seller to profit from a short sale. Please visit my blog at http://www.AmitsBlog.com for a tremendous amount of information on short sales.
Web Reference:  http://www.AmitsBlog.com
1 vote
Mark Paterson, Agent, Hollister, CA
Tue Oct 6, 2015
Not profit but may offer you a fee to help with your relocation costs. I have seen up to $10,000 allowance. It would be very advantageous to get something in writing.
0 votes
Robert Krop, Agent, Frederick, MD
Tue Oct 6, 2015
I have yet to come across a short sale bank that allowed the seller to walk away with any money.
0 votes
Mary Lucky, , Manalapan, NJ
Wed Sep 25, 2013
Sometimes banks can give money to leave a home
0 votes
playwithit, Home Seller, Rosemead, CA
Wed Sep 25, 2013
All these Real-Estate agent couldn't be so wrong- on a short sale, you can list the house at it's current value, the lender will balance out at 40% to 50% of your current loan if there is any money left, that go's to the seller....including the relocation fee- Real-Estate agent are there just to make commission not help the Seller...but to help them-self. Worth people to deal with...
0 votes
Frank, , California
Tue Dec 30, 2008
Need help actually, don't know where else to post. HEre in CA, I am a buyer of short sale house. Listing agent insists that the sellers get a check from me for $5,000. At first, it was an "incentive check" so seller would sign papers/accept bid. Then on actually paperwork it says under Terms and Conditions buyer agrees to pay seller $5,000 for modifications to the home (cheap ramps for people in wheelchairs) etc. Was there long before I put a bid on it. Shouldn't be paying for anything, so called incentive or their wording it as for modifications to the house. Help!
0 votes
Mott Marvin…, Agent, Sunny Isles Beach, FL
Thu Jun 19, 2008
That depends. Usually, a borrower involved in trying to short the lender has already refinanced the property and has NO equity. Many short sales do not involve lawyers at all. A seller can not recieve any proceeds from a short-sale, I'm sure some folk have figured a way around this policy too.

The lender is shorted and accepts less than the mortgage balance- lender loses- buyer gets the property for somewhere about 30-45% less than the mortgage balances.
0 votes
Some lenders do give relocation money to vacate the home.
Flag Mon Jul 31, 2017
Lynn Savits, Agent, Aventura, FL
Tue Jun 17, 2008
In a situation where the lender takes less than your mortgage amount i.e. Short Sale ,there is NO money available for the seller. You must check with the lender about how they handle the credit reporting-this varies greatly ,and they often do not advise you of the ramifications of this type of transaction . For more detailed help with your personal situation call Lynn Savits Coldwell Banker 305 331-6805 or email lynnsavits@att.net "FOR RESULTS YOU EXPECT AND SERVICE YOU DESERVE"
0 votes
Mary E. Absh…, Agent, Naples, FL
Mon Jun 16, 2008
Seller makes NO money on a short sale. The seller receives a release from the financial institution of the remaining debt on the property. On thing in SW Florida the financial institutions are doing is paying their homeowners monies to vacant the home and to not damage or sell the appliances and the A/C units. Any other questions, please contact me at 239-298-0600, Thanks, Mary E. Scalcucci
0 votes
Cyndee & Jack…, Agent, Seminole, FL
Sun Jun 15, 2008
Basillo
The seller does not make any money in a short sale however there are many reasons why now is the right time to do a short sale if you find yourself in this situation. If you would like more information on this feel free to contact and we're happy to answer your questions.
0 votes
Steve Scarpo…, Agent, Miami, FL
Sun Jun 15, 2008
Before a lender will approve a short sale they issue a list of conditions that must be satisfied and severaldocuments that the sellermust provide. One of the first conditions is that the Seller may Not receive any proceeds from the sale. Thesellerexpensesareabsorbed by the lender which include the customary fees charged by the closing agent (many times an attorney) who are closing the transaction.
0 votes
Claudia and…, Agent, Florida, FL
Sun Jun 15, 2008
No the seller does not make money on a short sale. That is inherant in the definition of a short sale.

The seller does however do a lot to save his credit by completing the short sale instead of allowing the home to be forclosed on.
0 votes
Scott Patter…, Agent, Aventura, FL
Sun Jun 15, 2008
No, the Seller's Lender will make sure it but the Sellers attorney will make their fee.
0 votes
Bill Eckler, Agent, Venice, FL
Sun Jun 15, 2008
Basilio,

"Short Sales" exist when the property is worth less that the owner owes on the property.....Thus it is no longer able to be sold at a price that reflects the true market value. The bank then considers selling the property "short" of the money that is actually owed to them.

The seller will make nothing on the deal and his/her credit will be negatively affected.

The "Eckler Team"
0 votes
Robin Sing-C…, , Fort Lauderdale, FL
Sat Jun 14, 2008
Basilio,

The Seller can not take any proceeds away from the closing of a short sale. the bank is taking a hit in order to settle the debt, and the Seller is allowed to have the property sold via short sale so that the Seller does not incur a foreclosure on their credit report.

If you are in foreclosure and are considering a short sale. Please make sure that if you elect to work with a Realtor, make sure they know what they are doing and have actually completed short sales. There are way too many "experts" out there. Be very careful.
Web Reference:  http://www.robinashley.com
0 votes
RN, , Miami, FL
Sat Jun 14, 2008
As Rick and Ines explained, no one really MAKES any money on a short sale. The buyer MAY get a house at a good price --provided he is willing to wait-- and both the bank and the owner are avoiding foreclosure.
The seller isn't making a penny.
If a lawyer is brought into the mix, well of course someone is going to pay him.
I may not be understanding your question completely, but you can find more information about short sales on my website.
0 votes
Jeff Launiere…, , Tampa, FL
Sat Jun 14, 2008
Since the lender is accepting less than is owed on the mortgage, in a short sale the seller cannot receive any proceeds from the sale.
0 votes
Ines Hegedus…, Agent, Miami, FL
Sat Jun 14, 2008
Basilio - a seller of a short sale does not make any money, on the contrary, they loose money and so does the bank.
Take a look at this article I wrote about Short Sales that should explain the process.
Ines
0 votes
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