Short Sale Myth #1
You have to have a hardship to do a short sale.
NOT TRUE. The lender has a business decision to make. Do I make more money now than at foreclosure sale? If you have a hardship they will be more likely to say yes faster, while requiring less in the form of any financial contribution than if there is no hardship. If there is no hardship you will need to be prepared to bring some cash to close the deal (not usually a huge amount) or sign a promissory note for a small balance. the highest number any client or ours has had to contribute was $25,000, but consider that he was $250,000 upside down.
Short Sale Myth #2
It’s better to let it go to foreclosure.
NOT TRUE (most of the time). I will challenge any attorney, accountant, or anybody else for that matter who says it’s better to let your go to foreclosure without trying a loan modification or short sale. There are a number of logical reasons one might make this claim. In most cases this message is conveyed because you can determine by law what will happen at foreclosure (it’s the lazy means to an end). Your other options like loan modification and short sale are subject to negotiation and therefore it cannot be determined what is the best option until an agreement is met with the lender. If the lender cannot match your protection at foreclosure sale, then let it go to foreclosure. The fact is they don’t want that to happen, and if you have a team of professionals to negotiate on your behalf, you will likely come out far better than accepting the worst case (foreclosure).
Short Sale Myth #3
I don’t have enough time to do a short sale.
NOT TRUE. As long as we can get an offer in to your lender even one day before the auction date, we can postpone the sale date allowing you more time to make a comfortable move, with a far better outcome than a foreclosure. Our team is a group of investors and we all have many investor clients who buy homes daily, offering us the luxury of finding a buyer for your home almost instantly (at the right price of course).
Short Sale Myth #4
Attorney’s and CPA’s are always right when giving advice on real estate.
NOT TRUE. We are all professionals in our own field. There is often an assumption that paying a lot of money for advice means the advice was right. Have you ever heard of going to another doctor for a second opinion? I often talk to clients who make a bad decision based on bad advice. We won’t claim to know everything, but when it comes to distressed real estate, we are considered specialists in our filed. My suggestion would be to put us on the phone with your attorney to concur that what they are telling you is true. There may be changes in the market today that could change the advice you received yesterday. We will be more than happy to converse with your attorney to get the best result for you.
Short Sale Myth #5
I won’t get a 1099 from a short sale or foreclosure.
NOT TRUE. You will get a 1099 every time there is forgiven debt! It is Federal Law. The question is are you liable for the taxes on the 1099 you will get. You need an accountant to give you that advice, and you need a real estate professional to negotiate the highest price possible to minimize the impact of the 1099. The home will alway sell for less at auction leaving you with a bigger 1099. Minimize your risk and try a short sale. Get the results of negotiation, and take them to a professional for advice as to whether it is better than foreclosure. Close you deal and be rewarded with the FRESH START you were seeking.