Any home for sale in Allentown, Bethlehem, or Easton may be a Short Sale.
A Lehigh Valley Home Buyer needs to be aware that purchasing a Short Sale can be a lengthy process and involves the home owner as well as their lender making all of the decisions.
It can typically take 3-5 months, after the seller says they accept the offer, until "their" Lender agrees, rejects, or counters the offer.
There are situations where the Lender counters the offer back at a price higher than the listed price. Just because the home owner agrees on a price does not mean their lender will.
What is a Short Sale?
A Short Sale is a loss mitigation solution that allows the home owner to sell the home for less than the total amount owed thus avoiding a foreclosure. When a home owner runs into financial problems, it is usually preferable to do a Short Sale then a Deed in Lieu Of or have the home go into Foreclosure. A Short Sale is common in a market that has taken a down turn. The home can not be sold for what is owed on it and there is no equity on the home.
Impact of Short Sale on the Lehigh Valley Home Seller!
- End of Collection Activity
- Avoid stress of Foreclosure
- Able to tell friends and family house was sold versus losing to foreclosure
Participants in a Short Sale
Many parties are involved in a Short Sale. To start the process, the home seller should contact the Loss Mitigation Department for their Lender and request a Short Sale application.
How Does a Lehigh Valley Home Seller Qualify for a Short Sale?
A Home Seller does not have to be behind on mortgage payments to qualify for a Short Sale but they must be able to document a hardship. The mortgage company/bank is going to require tax returns, w-2, letter of hardship and other financial and asset information.
Can Any Home Owner Do a Short Sale?
The mortgage company or bank is typically just a service provider. It is up to the "Investor" or holder of the loan to approve a Short Sale. Some Investors WILL NOT do Short Sales. If a 2nd mortgage, home equity loan, or tax/mechanic lien are involved, the Short Sale process gets more difficult and approval for a the Sale gets harder.
What are the Tax Implications of a Short Sale?
If a Lehigh Valley homeowner sells their home in a short sale the difference in what the bank or mortgage company accepts for the house and what is owed on it is considered taxable income. For instance, if the mortgage amount is $150,000 and a short sale results in the mortgage company only getting $130,000 then that $20,000 difference is considered revenue to the home seller. The home owner should check with an accountant to determine if they will incur any tax reprecussions as a result of a short sale.
Short Sale Time Line
The process to get approval for a Short Sale typically takes 3-5 months after completing the application, getting the home under agreement by a buyer willing to wait, and submitting all required paperwork.
A home owner may be able to speed up the process by communicating beforehand with their lender to determine if they qualify and the correct steps to do a successful short sale.
Want More Information about Lehigh Valley Real Estate and Short Sales?
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