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Top 9 benefits of doing a Short Sale


What is a Short Sale? A short sale is a favorable alternative to foreclosure where the lender on a property agrees to accept (as a full payoff) less than what they were originally owed, so that they can avoid the foreclosure process and allow the house to be sold. The bank also absorbs all the costs of sale. (Including realtor commissions, closing costs, escrow fees, etc).


So for example, let's say that a homeowner is unable to make their mortgage payments. Their mortgage balance is $500,000, but the property value has since dropped down to $450,000. With a short sale, the lender will reduce the amount of money they are owed so that it's low enough to allow the property to be sold for $450,000, and to cover the associated costs of sale.


Thinking of doing a Short Sale? Here are its benefits:


1. Save Your Credit

The #1 reason for doing a short sale is to save your credit. A Short Sale is reported to the credit bureaus as an “agreed settlement short of full payment”. This is far less detrimental to your credit rating than a foreclosure, because a foreclosure stays on your credit report for 7 long years, and drops your credit rating (fico score) by hundreds of points. This has a very damaging effect because your credit affects things such as: future employment, buying a car, buying another home, renting a home, insurance rates, interest rates, and much more.


2. Minimize The Consequences Of Any 1099-C's

Whether you do a short sale, or the property is sold at foreclosure auction, the bank will report their loss as income to you through the issuance of a 1099-C. The important difference here is that the 1099-C will be for a much smaller amount with a short sale, since the property will sell for a higher amount than it otherwise would at the foreclosure auction.

However, thanks to recent changes in the tax laws, you may not owe any taxes on your short sale. The Home Mortgage Forgiveness Debt Relief Act of 2007 states that the if a short sale is on your primary residence, and the short sale loan was 'purchase money', then any loss you experience will be non-taxable. What if you refinanced the loan, or it was an investment property? In that case you may still be exempt through a little-known tax code pertaining to insolvency. Contact our office and we explain how this exemption can save you a considerable amount of money.


3. Buy A House In 2 Years vs. 5-7 Years

Fannie Mae (America’s largest mortgage buyer) requires that you wait only 2 years after a short sale before getting a new loan, and 5-7 years after a foreclosure before getting a new loan. This extended wait time causes many ‘would be’ homeowners to miss out on the market’s current low prices.


4. It's FREE!

Your short sale is completely FREE at Short Sales Expedited™. There is absolutely no cost to you. We are paid from the lender or from the end-buyer. And since your short sale is completely free, doesn’t it make sense to work with the best?


5. No Commissions, No Closing Costs, No Fees

All costs of selling your house through a short sale are paid for by the bank. The realtors’ commissions, the title and escrow fees, any home repair fees, and all other fees, are all covered by the bank.


6. Money From The Government

The government has realized that short sales help borrowers, lenders and the community in general, so they now offer short sale incentives. For each short sale, the government currently pays up to $1,000 to the lender, and up to $1,500 to the borrower.


7. You Control The Move Out Process

With a short sale, you are in charge of the move out process. You can move out on your own accord, and you and your family can avoid being involved with any part of the eviction process.


8. Free Rent

It often takes 2-3 months or longer, to fully negotiate and consummate a short sale transaction. During that time period, you can stay in the house and live completely rent and mortgage payment free.


9. Peace Of Mind. Relieve The Stress Of Foreclosure

It’s no surprise that the foreclosure process is a stressful time. The stress makes it hard to focus on your life, and your business and personal relationships often suffer the consequences. Even the simple act of beginning the short sale process, takes a significant amount of the weight off your shoulders. You’ll feel better about yourself, and the entire situation, the minute we get started.


Want to do a Short Sale? Creative Home Solutions Now services are available to you at no charge and no obligation. Let us help you!


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