Short Sale
Real Estate Short Sale
Defaulting on mortgage payments can be a difficult situation. Many people find themselves falling into default, or are already in default, and don't realize that there are options available before the bank takes the house away. A short sale is an excellent way to avoid foreclosure and can offer time and protection, as long as it is done properly by a qualified attorney.
A Short Sale or Short Pay is when the lender agrees to accept a sales price of fair market value for your property despite the loan or loans totaling more than what the property is worth.
In this scenario, the lender takes a loss on the property and writes off the difference between what was owed on the property and the final real estate short sales price. In most cases, the lender takes less than what is owed on the property to fully satisfy the loan.
Why would a Borrower want to do a Short Sale?
Short Sales are a benefit to consumers because they stop mortgage foreclosure and prevent the lender from suing for deficiency. Deficiency is the difference between what the lender would have received under the contract and what the property finally sells for. This shortfall can often be more than $100,000.
By entering into a voluntary agreement with the lender, you ultimately stop foreclosure and your credit report does not merit a FORECLOSURE entry. This puts you in a much better position to qualify to buy another property in the future.
Through our negotiation process, the lender agrees to forego suing you for any monies which they write off associated with the Short Sale transaction.
A Short Sale transaction also provides peace of mind and predictability because you know exactly when the sale will close, and thus when you will need to vacate the property. There's no risk that sheriff's deputies will come to your door one morning to evict you.
Why Should I hire a Real Estate Attorney for a Short Sale?
Negotiating a Short Sale is a difficult process, generally because the lender will require certain documents and information, but too much information or documents in the wrong format can completely destroy a transaction. Specifically, the lender will require documents demonstrating the property value, and then will verify such value with a broker’s price opinion or “BPO”.
Additionally, the lender will ask for financial information about the borrower. The borrower must now convince the bank that he/she is insolvent and simply can not make the payment going forward. Think of it as a backwards loan application. It is important to give the lender precisely what they want at this stage without lying (often including bank statements and tax returns), but also paint a grim picture of the borrowers financial circumstances
This stage is the most sensitive because the borrower must prove they do not NOW have the income to make the payments, but at the same time the borrower must be careful not to implicate themselves in mortgage fraud from when they applied for the loan and “proved” to the lender they DID have the income to make the payments. It is critical to be properly represented through this process by a qualified Short Sale attorney…for your own protection!
What are the tax implications of a Short Sale?
The tax situations of individual borrowers are different, but in general, any 1099 income generated by a Short Sale is usually offset by the loss the borrower took on a bad investment. Often, critics of Short Sales look only at the 1099 income without considering the benefit of the offsetting deduction for the loss on the property.
The bottom line on taxes is that the tax year in which the borrower completes the Short Sale is a complicated one, and it is critical to have a Certified Public Accountant prepare taxes for that year. It is easy to miss the deduction. Don't let it happen to you. The Lit Law Group, P.A. is happy to refer clients to a qualified tax professional who can properly prepare returns after a short sale.
Contact our office for a free no-obligation consultation.
Real Estate Short Sale
Defaulting on mortgage payments can be a difficult situation. Many people find themselves falling into default, or are already in default, and don't realize that there are options available before the bank takes the house away. A short sale is an excellent way to avoid foreclosure and can offer time and protection, as long as it is done properly by a qualified attorney.
A Short Sale or Short Pay is when the lender agrees to accept a sales price of fair market value for your property despite the loan or loans totaling more than what the property is worth.
In this scenario, the lender takes a loss on the property and writes off the difference between what was owed on the property and the final real estate short sales price. In most cases, the lender takes less than what is owed on the property to fully satisfy the loan.
Why would a Borrower want to do a Short Sale?
Short Sales are a benefit to consumers because they stop mortgage foreclosure and prevent the lender from suing for deficiency. Deficiency is the difference between what the lender would have received under the contract and what the property finally sells for. This shortfall can often be more than $100,000.
By entering into a voluntary agreement with the lender, you ultimately stop foreclosure and your credit report does not merit a FORECLOSURE entry. This puts you in a much better position to qualify to buy another property in the future.
Through our negotiation process, the lender agrees to forego suing you for any monies which they write off associated with the Short Sale transaction.
A Short Sale transaction also provides peace of mind and predictability because you know exactly when the sale will close, and thus when you will need to vacate the property. There's no risk that sheriff's deputies will come to your door one morning to evict you.
Why Should I hire a Real Estate Attorney for a Short Sale?
Negotiating a Short Sale is a difficult process, generally because the lender will require certain documents and information, but too much information or documents in the wrong format can completely destroy a transaction. Specifically, the lender will require documents demonstrating the property value, and then will verify such value with a broker’s price opinion or “BPO”.
Additionally, the lender will ask for financial information about the borrower. The borrower must now convince the bank that he/she is insolvent and simply can not make the payment going forward. Think of it as a backwards loan application. It is important to give the lender precisely what they want at this stage without lying (often including bank statements and tax returns), but also paint a grim picture of the borrowers financial circumstances
This stage is the most sensitive because the borrower must prove they do not NOW have the income to make the payments, but at the same time the borrower must be careful not to implicate themselves in mortgage fraud from when they applied for the loan and “proved” to the lender they DID have the income to make the payments. It is critical to be properly represented through this process by a qualified Short Sale attorney…for your own protection!
What are the tax implications of a Short Sale?
The tax situations of individual borrowers are different, but in general, any 1099 income generated by a Short Sale is usually offset by the loss the borrower took on a bad investment. Often, critics of Short Sales look only at the 1099 income without considering the benefit of the offsetting deduction for the loss on the property.
The bottom line on taxes is that the tax year in which the borrower completes the Short Sale is a complicated one, and it is critical to have a Certified Public Accountant prepare taxes for that year. It is easy to miss the deduction. Don't let it happen to you. The Lit Law Group, P.A. is happy to refer clients to a qualified tax professional who can properly prepare returns after a short sale.
Contact our office for a free no-obligation consultation.
NEWS & EVENTS
727.388.8332 Clearwater
813.793.7993 Tampa
Free Consultation
813.793.7993 Tampa
Free Consultation
The information on this Law Firm's website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.
Main Office: 2364 Boy Scout Rd., Suite 200, Clearwater, FL 33763 Phone: (727) 388-8332 Fax: (727) 499-6757
Tampa Office: 2202 N. Westshore Blvd., Suite 200, Tampa, FL 33607
The Lit Law Group, P.A. is proud to serve the following cities, counties and communities of Florida:
Tampa, St. Petersburg, Clearwater, Brandon, Temple Terrace, Bloomingdale, Carrollwood, Carrollwood Village, Cheval, Citrus Park, East Tampa, Egypt Lake, Fish Hawk, Gibsonton, Lake Magdalene, Lutz, Northdale, Palma Ceia, Pebble Creek, Plant City, Riverview, Ruskin, Seffner, South Tampa, Sulphur Springs, Thonotosassa, Town 'n' Country, Valrico, West Chase, West Tampa, Ybor City, Redington Beach, Belleair Beach, Belleair Bluffs, Pinellas Park, Belleair Shore, Redington Shores, Dunedin, Safety Harbor, Gulfport, St. Pete Beach, Indian Rocks Beach, Indian Shores, Seminole, Kenneth City, South Pasadena, Largo, Tarpon Springs, Madeira Beach, Treasure Island, Bradenton, Ocala, Winter Haven, Palm Harbor, Holiday, New Port Richey, Hillsborough County, Polk County, Pasco County and Pinellas County
Main Office: 2364 Boy Scout Rd., Suite 200, Clearwater, FL 33763 Phone: (727) 388-8332 Fax: (727) 499-6757
Tampa Office: 2202 N. Westshore Blvd., Suite 200, Tampa, FL 33607
The Lit Law Group, P.A. is proud to serve the following cities, counties and communities of Florida:
Tampa, St. Petersburg, Clearwater, Brandon, Temple Terrace, Bloomingdale, Carrollwood, Carrollwood Village, Cheval, Citrus Park, East Tampa, Egypt Lake, Fish Hawk, Gibsonton, Lake Magdalene, Lutz, Northdale, Palma Ceia, Pebble Creek, Plant City, Riverview, Ruskin, Seffner, South Tampa, Sulphur Springs, Thonotosassa, Town 'n' Country, Valrico, West Chase, West Tampa, Ybor City, Redington Beach, Belleair Beach, Belleair Bluffs, Pinellas Park, Belleair Shore, Redington Shores, Dunedin, Safety Harbor, Gulfport, St. Pete Beach, Indian Rocks Beach, Indian Shores, Seminole, Kenneth City, South Pasadena, Largo, Tarpon Springs, Madeira Beach, Treasure Island, Bradenton, Ocala, Winter Haven, Palm Harbor, Holiday, New Port Richey, Hillsborough County, Polk County, Pasco County and Pinellas County
