Are you a homeowner who needs to sell but who is “upside down” on your mortgage (i.e. you owe more on your mortgage than the home is currently worth)? Do you know someone in that position? Chances are, you or someone you know in Charlotte is facing the possibility of foreclosure. But you need to understand that you are not alone. We can help homeowners avoid foreclosure and the resulting damage to their credit through a short sale solution.
Today, 1 out of every 6 homeowners in America is behind on mortgage payments. These are tough and frustrating times. The risky lending practices of the past decade and the more recent economic turmoil have burdened tens of thousands of homeowners, and many can no longer afford their mortgages. Now more than ever, it’s important to identify your options. You can avoid foreclosure in Charlotte and your financial future can be preserved by a short sale of home in Charlotte. Additionally, your credit can be salvaged by a Charlotte short sale. In fact, the short sale credit impact is less than the much harsher impact of a foreclosure. Remember..there are dignified solutions available!
We are Charlotte short sale Realtors. As a member of the Distressed Property Institute, we are a Certified Distressed Property Expert broker. Only 2% of all real estate agents nationwide hold this coveted professional designation. As a CDPE designated broker, we’re extensively trained to help you or someone you know assess the best options available for a distressed homeowner. Through our experience handling distressed properties as short sale specialists in Charlotte Mecklenburg, we know that homeowners today have more questions than answers about their circumstances. We have created this webpage to help potential short sale sellers in Charlotte understand the short sale process for sellers and the available foreclosure solutions in Charlotte NC.
We offer a detailed explanation of short sales to answer the questions regarding “what is a short sale” and “how do short sales work”. Our goal is to help homeowners determine when considering a foreclosure vs short sale, whether a short sale may be the best course of action. Lenders want to avoid foreclosure whenever possible and are increasingly seeing the value of a short sale solution. Like no other time in real estate history, mortgage lenders are willing to consider short sales as an alternative to foreclosure and a way to mitigate their mounting losses.
As short sale Realtors in Charlotte we know that there are options available to you. There is foreclosure help in Charlotte. We can help see you through it. Time is precious when a foreclosure is looming so don’t wait. Contact us today for a FREE Report to explain your options and to help you decide on a course of action. The idea of losing a home can be overwhelming. We feel it is vital for you to have all the facts necessary to make an informed decision.
Benefits of short sale solutions for homeowners
- Homeowners are able to sell their homes, rid themselves of their “underwater” mortgages, and avoid foreclosure and the resulting damage to their credit. This allows them to confidently move ahead with a fresh start.
- Mortgage lenders will pay all servicing, selling and listing fees, leaving homeowners with little to no out-of-pocket expenses.
- Homeowners may be eligible for a $3,000 Borrower Relocation Assistance stipend through the federal government’s HAFA program.
What is a real estate short sale?
Distressed properties account for nearly 40% of all U.S. home sales and estimates suggest that as many as 20% of all mortgages are “under water.” Like no other time in history, lenders are willing to consider short sales as an alternative to foreclosure. Millions of homes are under water and their homeowners are drowning fast. These are the people who need short sales the most.
A short sale refers to the sale of real property for a sum less than the amount owed on it. In other words, a short sale is a solution for homeowners who are “upside down” on their mortgages. If a homeowner meets a series of criteria, their mortgage lender may agree to short sell the property by agreeing to accept less than the full balance due and forgive all or a large portion of the difference. Real estate short sales are typically initiated to help homeowners in financial distress avoid foreclosure.
We believe in finding ways to help homeowners keep their homes if this is what they desire. Unfortunately, a large number of homeowners facing foreclosure have hardships that leave them no alternative but to liquidate their property due to divorce, death of a spouse, illness, job loss or transfer and other challenges. These are homeowners who must sell.
Who benefits from a short sale?
The short sale is clearly a win for distressed homeowners. But more than this, it is a win-win solution for all parties.
- Homeowners win because they are able to sell their homes and avoid foreclosure
- Buyers win because they are able to acquire property at a good price
- Lenders win because they mitigate their loss by getting the majority of their money back on a loan that is facing default
Qualifying criteria for short sales
Lenders typically require that homeowners meet the following four criteria in order to be considered for a pre-foreclosure short sale:
- The homeowner must be experiencing a hardship
- The homeowner must owe more than the home is worth
- The homeowner is past due on their mortgage (but not always necessary if there is proof that default is imminent)
- The homeowner must be able to show that they can no longer afford the property or bring money to closing.
If a homeowner meets the above criteria we have a greater than 90% success rate for getting short sales approved!
How will the short sale affect my credit?
Short sales are still a relatively new concept. Banks have the option of submitting the short sale to the credit bureau as “Paid in Full” or “Settled for less than full balance”. As far as your credit score is concerned, there is no evidence to support that a short sale will lower your credit score. In a short sale, the lender is simply allowing you to pay less than you owe!
If you are currently behind on your mortgage or facing foreclosure, the short sale will actually help your credit. Once you are approved for the short sale, all collection activity will STOP and you will avoid foreclosure!
Why would banks forgive the difference?
To mitigate their losses, banks often accept a settlement of less than what is owed on the property. When faced with the option of getting the property back through foreclosure, a short sale often makes a much wiser business decision for the bank.
This sounds too good to be true!
Not really. Things that are “too good to be true” usually don’t make good economic sense. The short sale makes good common and financial sense for the banks who grant them. The fact of the matter is mortgage companies and banks are NOT in the real estate business. They are in the LENDING business. The last thing they want is that property back.
What is “negative equity”?
Also known as being “upside down” negative equity is the difference between the value of an asset and the outstanding portion of the loan taken out to pay for the asset, when the latter exceeds the former. For example, if your car is worth $10,000 and you owe $15,000 on it, you would have a negative equity of $5,000. Negative equity can result from a decline in the value of an asset after it is purchased.
Some areas decline in value. In other areas, prices may remain flat so that the properties in that area do not appreciate. If a seller wants to sell within 2-3 years of purchasing their property, they may be in a situation where they have negative equity.
Why does my property have “negative equity”?
Here are a few common reasons:
- Person bought at the height of the market and the market has now declined or paid more than the property was worth.
- The area has become less desirable for any number of reasons, so property values have declined.
- Person purchased the home with little or no money down and wants to sell within a few years of purchase. and the property value has not increased during that time. Therefore, costs associated with selling the property may create a balance due at closing,
- Person refinanced the home (with a high appraisal value) and now has little or no equity.
- Person bought in a brand new subdivision or recently developed area that has not been fully developed or has not appreciated (or has depreciated) in value
- The market is soft because there is too much builder (new home) inventory or too many existing homes on the market (buyer’s market)
What if I owe what my home is worth?
Even if you owe exactly what your home is worth, you may still need to do a short sale in order to pay for the costs of the sale (agent fees, title policy, and other seller closing costs).
Why not just let my lender foreclose?
NO! What is the first thing banks do when they foreclose on a property? Hand it over to a real estate agent to get rid of it quick! The foreclosure process is a legal process. It involves attorneys and it costs MONEY. Once they get the property back via foreclosure they must often sell it for MUCH LESS than market value and pay agent commissions and all customary closing costs. Doesn’t it make more sense for them to take at or a little below fair market value before foreclosing? And, even when they do sell it through foreclosure… this does NOT remove your obligation to repay the remaining balance! It is not wiped away!!!
What if I’m not behind on my payments?
Short sales work?even if you’ve never missed a payment! We have successfully negotiated short sales for homeowners who have never missed a mortgage payment. They just happen to be in a negative equity position and need the short sale in order to sell their home.
How long does it take?
Short sale approval can take 30-45 days.
What if my home is already in foreclosure?
Your foreclosure sale will usually be suspended during the short sale process. That’s why it’s imperative that you contact us right away!
Will my lender send me a 1099 on the debt forgiven?
If the property is your primary residence, you should not receive a 1099 for the debt forgiven or have to pay any taxes on the forgiven debt.
For investment property, the lender does have the right to report to the IRS the amount they have forgiven in a short sale transaction and the amount of the resulting tax will be far less than the debt forgiven. The resulting tax is far superior to paying the difference of the debt. Also, if the property is in foreclosure, the foreclosure would have a much more devastating affect on you than the amount of the 1099.
How much will the short sale cost me?
We strive to complete the entire short sale process without asking the seller bring any money to closing. There are certain expenses that the lender might not pay, such as unpaid Home Owners Association dues and certain escrow fees. In most cases, these items total no more than $300 to $800. We will not know exactly how much they will be, if any, until we are closer to closing.
Although this may sound high, it is usually less than one month’s mortgage payment. We will get the lender to forgive your unpaid taxes, unpaid mortgage payments, pay all of the real estate agent’s fees associated with the sale and customary seller closing costs. The savings to you is typically in excess of $20,000, so the amount you might have to bring is a small price to pay for the large debt forgiveness.
Do you think I should do a loan modification instead?
If you desire to keep your home and can afford to make monthly payments, then YES, you should keep it. You will need to demonstrate to the bank that you are generating more income than your current monthly expenses. Is this the case? If so, you’ll need to call your lender and let them know that you want to do a loan modification and see if you qualify. If you aren’t approved, we can then move forward with a short sale. We cannot however, work the short sale at the same time that you are working with your bank on a loan modification.
Can I lease out my home while we’re waiting on the short sale?
We don’t recommend that you lease your home while waiting on the short sale. Lenders will not be sympathetic to sellers who are collecting rent payments, especially if they are not making mortgage payments.
How will a short sale affect my taxes?
Most sellers who are selling their primary residence via a short sale will not be taxed on the forgiven debt. However, in cases where the property is not the seller’s primary residence, the lender has the right to report to the IRS the amount they have forgiven in a short sale transaction.
We have a proven system with a 95% short sale approval rate through our comprehensive qualifying process. For more comprehensive information and to learn more about how we can help you or someone you know “Get out from Under Your Underwater Home”, complete the form below.