Short Sale Services
Top 10 FAQ’s
Question #1 - What is a Short Sale?
Answer - A Short sale is when your mortgage Bank allows you to sell your property for less than what you owe on your mortgage, without having to pay them the difference. It means that even if your property is worth less now, than it did when you purchased it, you can still sell it, avoid foreclosure, and achieve debt forgiveness.
Question #2 - Don't I need to prove that I have no money at all before the bank will allow me to do a Short Sale?
Answer - No. The Loft Warehouse will help you make the case that your property is now worth so much less than it did when you borrowed the money to purchase it, and that to stay in the mortgage now is a financial hardship you cannot sustain.
Question #3 - How do I handle the phone calls I get from the Bank, asking me about getting caught up with my late payments?
Answer - Once you hire The Loft Warehouse to help you sell your property and conclude a Short Sale, you no longer need to deal with the mortgage Bank any further, starting that very same day. We have an Authorization Letter that you sign, which gives The Loft Warehouse the authority to discuss all matters pertaining to the sale of your property , and the elimination of your debt. However, you may still contact your Bank at any time if you wish.
Question #4 - How much does this cost me?
Answer - The Loft Warehouse only accepts Short Sale listings that we know we can find a buyer for quickly. Our service costs you nothing, and even when the deal closes, you do not pay our commission. Your mortgage Bank does. If we can not achieve debt forgiveness for you, you owe us nothing. Additionally, if you are eligible for the HAFA relocation credit, you could even walk out of the closing with cash in your hands!
Question #5 - What happens after the Short Sale? Will the Bank continue to pursue me for the difference in the amount paid vs. the original loan amount? Will I pay taxes on the forgiven debt? What about my credit score?
Answer - Many times the Bank will offer you the ability to do a Short Sale but
they will do so on condition that you carry a promissory note for the
difference. But The Loft Warehouse is almost always able to negotiate a final payoff letter from your bank that will close out to zero any outstanding mortgage balance, forever.
The Loft Warehouse wants you to be prepared for the following Effects of a Short Sale:
- 10-12 month’s damage to credit report, after which time you will be mortgage ready again. Credit report will show the mortgage account “settled – for less than agreed amount”. This is far better than the 7 years damage a foreclosure can do to your credit report.
- A federal tax liability for the forgiven debt, which may be treated as income. You should discuss this with your accountant before tax time, as there are opt-out exemption criteria for taxpayers who are financially unable to pay the extra income tax.
- You will not be able to recoup any of the money you put into the home, if any.
Question #6 - What about the Sheriff Sale? Does that stop a Short Sale?
Answer - No. The Sheriff Sale is the beginning of the foreclosure process, after which there remains a 6 month statutory Redemption Period in the State of Michigan. At any point before the end of the 6 month Redemption Period, the bank is able to negotiate a short sale with Seller (you) and The Loft Warehouse.
However, it is to your advantage to contact The Loft Warehouse as soon as possible to conclude the short sale before the Sheriff’s sale for the following reasons:
- The foreclosure will be avoided that way and thus will not show up on your credit
- The public notices about your foreclosure (which are distressing and embarrassing) will be avoided
- You will avoid the harassment and stress of not knowing when the bailiff is coming to forcibly remove you, your family, and your belongings. In some cases, the 6 month period is accelerated because the attorney makes the case that property is abandoned.
Question #7 - How long does it take usually in Wayne County for the Sheriff Sale to occur once I stop making my mortgage payments (and should I stop making them)?
Answer - Most mortgage Banks are working towards a 90 day period between the first missed payment and the formal notice of default. The Sheriff’s Sale is the default recording instrument and it begins foreclosure. At the Sheriff’s sale, the Bank establishes themselves as the owner of the property. But due to extremely high volume of foreclosures in Wayne County, sometimes that takes 6 months to a year. We have the time we need to conclude a deal, especially if you contact us early in the process before the foreclosure is final.
Question #8 - Do I have to rent a place after a Short Sale and wait a long time to be in a position to purchase a property again? What are my options for housing immediately after a Short Sale?
Answer - The Loft Warehouse takes a long term view with all of our clients. We want to be your single source of real estate advice, and service throughout all of the life changes that cause you to move from one home to another. As such, we can help you as follows:
- Get you into a new lease, helping you to get accepted despite less than perfect credit
- Negotiate for you a “rent to own” deal where your rent payments go towards the purchase of a new home, when your credit has improved enough to obtain a new mortgage (average 12 months with our strategic partner “ Southwest Housing Solutions” credit repair program)
- Negotiate for you a Land Contract deal that establishes you as a homeowner but the financing comes from the Seller, not from a Bank
The Loft Warehouse offers a number of creative solutions to those who are transitioning out of their homes via the short sale process
Question #9 - How do we know in advance what the Bank will accept as a payoff i.e. how do we know what to list the property for?
Answer - Once you chose to do an Exclusive Listing with The Loft Warehouse, we then proceed with the marketing of your property based upon the facts at hand. We do a market analysis that considers all recent relevant sales within the last 3 months, including foreclosures, and we price your home accordingly. We realize that there will be a formal appraisal by the bank before they accept the offer, so we include the same comparable sales that the appraiser would use. It doesn’t matter if the current value of your home is only 30% of what you paid for it. The Short sale is based on current value.
Question #10 - Can I continue to live in my home while the property is marketed and the Short Sale is going on?
Answer - The Loft Warehouse suggests that you vacate the home during the marketing of the property. When your home is priced at the current value, there will be so many showings, that scheduling will be very disruptive if you continue to live in the home. In addition, most of the showings will be set with very little advance notice by other agents, and we need to have “at will” access to the home.
Remember, time is of the essence in the Short Sale process, and The Loft Warehouse manages time very efficiently – which means we can’t afford to reschedule showings. The Loft Warehouse
can help you find new accommodations and prepare your home for sale, so
that the burden of your mortgage debt can be taken off your shoulders,
fast and permanently.
I need to prove that I have no money at all before the bank will allow me to do a short sale