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Short Sales in today’s Naples Real Estate Market

Click here for a full list of Naples Short Sale Properties

Our team has successfully negotiated short sales for primary residents, investors and second home buyers. If you want to get he bank off your back and move on with your life, call us today and we will explain how we can help you achieve your goal.
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What is a Short Sale?
The process of selling real estate where the proceeds of the sale fall short of the balance owed on the property is called Short Sale. In the process of Short Sale, the mortgage lender agrees to discount the loan balance due to a financial hardship.

A short sale occurs when the homeowner borrowed more than they could afford to repay or when an unforeseen change in the homeowner’s life, such as illness, divorce, disability, loss of jobs, is taking place affecting the person’s income. This is when a financial hardship occurs.

Why Short Sale?


When defaulting on a home loan, there are two main options that the homeowner can choose from: short sale or foreclosure.
While a foreclosure process is extremely damaging to someone’s credit score for many years to come, a short sale is usually reported as a debt settled for an amount less that what is due. This will still cause a lowering of a credit score but it is not as serious as the reporting of a foreclosure.
A short sale spares the homeowner the stress and embarrassment of a foreclosure process. In a foreclosure, the lender may pursue the borrower for a deficiency judgment to cover their losses. In a short sale a homeowner may be able to convince the lender to accept the sale as payment in full without the burden of a deficiency judgment.

Would a Lender agree to a Short Sale?


The answer is Yes. Simply put: Lenders are not in the real estate business, they are in the mortgage business. The alternative, foreclosing on a property, could cost a bank fees in excess of $50,000-$60,000. From a business point of view, selling a property short is a better deal for the bank.

How does a Short Sale work?


In order for a short sale to happen, three conditions must be in place:

  1. The homeowner mortgage payments must be at least 60-90 days late.
  2. There is no Bankruptcy filing associated with the homeowner.
  3. Hardship must exist.

Homeowner requirements when going through a Short Sale.

A homeowner considering going through a Short Sale must consult with a Realtor or a Real Estate Lawyer. The process is complicated and involves several steps where a professional can be of great help.
There is no guarantee that your lender will agree to accept a lower payment but with enough documentation, the chances are higher. Here are some of the necessary documents that need to be presented to the lender.

  • An authorization letter. This letter needs to be signet and notarized and has to give the lender permission to discuss your mortgage details with a Realtor or a potential buyer.
  • A hardship letter. You must be able to prove that your financial situation is desperate and you have no other assets that you can use to reduce your debt. The more documentation you supply, the higher the chances that the lender will agree to a short sale.
  • A property value statement. This can be an appraisal or a Realtor’s opinion and it has to prove that you will not be able to sell the property and cover the mortgage. The lower- but ethical- valuation of your property, the better chances you have that the lender will accept a short sale.
  • A purchase offer or a signed contract. Presenting a signed contract to a lender might look more appealing than the alternative of a long foreclosure process. The banks will never disclose the amount that they would be willing to accept in the case of a short sale. This is where the true market value will show what a buyer is willing to pay.
  • A Settlement Statement. This statement can be prepared by a closing agent or a real estate lawyer and should show how much the lender will end up with at closing, as well as the amount of loss they will be taking.

Things to remember:

  1. In order for a short sale to take place, a homeowner must be at default for at least 60-90 days.
  2. If you have more than one lender, all lenders must approve the short sale and their written approval must be on the sale contract.
  3. Some lenders may send you a 1099 tax form that will show the amount forgiven as income. The  The Mortgage Forgiveness Debt Relief Act of 2007 however, removes this tax liability. Please visit http://www.irs.gov/individuals/article/0,,id=179414,00.html for more information.
  4. As some states may allow deficiency judgments, you must make sure that you are protected from this in the short sale agreement.
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RealPro Realty LLC | 1750 J&C Blvd.#1, Naples FL 34109 | o: 239-449-4745 | c: 239-404-7576 | f: 239-236-1436 | www.realestatenaples.com | www.realprore.com | |email |