Arizona Short Sales
Although a short sale can offer many benefits, it is no small task. It is important to consider all options and ensure it is the best choice given your individual situation. One of the main advantages short selling has over foreclosing is your ability to avoid the damage a foreclosure will do to your credit score, however a short sale is not without its disadvantages.
What is a short sale?
A short sale is the sale of real estate that generates proceeds less than the amount owed on the property. Basically, the borrower negotiates with the lender(s) for a payoff that is less than what is owed. Typically, the lender and the borrower decide it is preferable to absorb the moderate loss which occurs in a short sale versus the much larger loss incurred in the event of a foreclosure.
Why is hiring an experienced short sale realtor so important?
In a short sale, the right realtor is even more critical than in a standard real estate transaction.
- Expose myths and misconceptions: The short sale process is complicated and confusing and there is an overabundance of information floating around about them these days. The problem is, much of it is untrue. Unfortunately, many Realtors do not have the experience and knowledge-base to properly assist homeowners through the ins and outs of a short sale and clearly guide you.
- Time is of the essence: There is only a small timeframe in which to sell your home in a short sale. Otherwise, you risk sending your home into foreclosure and damaging your credit score for years to come.
The John Samuels Agency understands the complexities of the short sale process and how critical the deadlines are. We’re here to help you through every step of the process.
What qualities does a short sale realtor have?
There are many real estate agents in the Phoenix area who think they are “experts,” but the reality is, not all of them can be – and many of them are not!
- Understands the time necessary to do the job: Marketing homes and negotiating with banks in a short sale are both full-time jobs. If a realtor is unable to dedicate the time it takes to do all of that negotiating, then they are not up to the task of handling your short sale.
- Team effort: One of the most important things a short sale expert requires is a team behind them.
The John Samuels Agency team understands the time it requires to properly market a home and negotiate with the bank. While the agent focuses on marketing your home, their team of negotiators can concentrate on working directly with your bank. No one person can do it all, so a group of people in your corner is critical.
Why do I need a team of experts like those at JSA?
- Established contacts at banks: Having a support team that is in constant contact with banks means you have a virtual direct line to specific bank employees/staff.
- House sells faster: If a short sale home is not sold in time, it could go into foreclosure – the last thing a homeowner wants to see happen. Banks have been cutting commissions they offer for short sales, thus reducing incentive for buyers’ realtors. Add that to the fact your realtor does not have the time to dedicate to negotiating with your bank, and you’ve got a recipe for disaster. A real expert is better able to protect a buyer’s agent’s commission and with a team to help do the negotiating, an expert short sale realtor can keep tabs on the auction date and ensure foreclosure is avoided.
How does a short sale affect my credit?
- After a short sale, the borrower must wait approximately two years to purchase another home. (In the event of a foreclosure, the waiting period is two to five years!)
The best advice is to seek guidance from a tax accountant or lawyer to help assess your credit situation and understand the full effect a short sale will have. Their services are not generally free, but a little professional advice can save you years of stress and hassle in the future.
Will a 1099 be issued when a short sale is completed?
In short, yes. Any canceled or forgiven debt by a lender must, by law, be included as income on your tax return. We recommend you consult with a tax accountant or lawyer to determine whether the income on the 1099 is taxable.
What about a deficiency against me during the foreclosure process?
The Arizona anti-deficiency law prevents lenders from pursuing borrowers for the difference between what is owed on a mortgage loan and what is recovered by the lender in a foreclosure sale in most cases.
The best advice in this case is to seek counsel from a real estate lawyer.