Do You Need To Sell Your House Short?

What Is a Short Sale?

In today’s market, with declining home values, many homeowners are looking to “Short Sale” their house when they can no longer afford their monthly mortgage payment. A short sale is when the mortgage amount owed is larger than what the house will sell for and there won’t be enough proceeds from the sale to payoff the mortgage. Therefore the bank will be Short (of the amount of money it is owed to pay off the mortgage in full).

If you are in the situation where you can no longer afford your monthly mortgage payment, you basically have 3 options:

1) Mortgage Loan Modification. This is where your mortgage company will try to workout a mortgage payment plan that will reduce your monthly mortgage payment to fit your budget, typically by reducing the interest rate on you mortgage loan.

2) Ask your mortgage company to accept a Short Sale.

3) Deed-In-Lieu. Usually would only be considered if you have only one mortgage on your house. Banks typically don’t like doing them because certain liens, such as past due HOA fees, will become the responsibility for the bank to pay off.

4) Give the house back to the bank and let the bank foreclose.

The reality is that the Mortgage Loan Modification has limitations and usually does not workout. When a Workout agreement fails (most of the time) another route for a homeowner to take is to ask their mortgage company to accept a Short Sale.

In Arizona it will typically take at least 6 months (after a home owner stops making their monthly mortgage payments) until the bank will “foreclose”. The foreclosure is accomplished by having a trustee sale on the courthouse steps (literally). Most houses are not purchased at the trustee sale, so the bank will take back possession and now owns the property (REO – Real Estate Owned).

Keep in mind there are potential tax and deficiency consequences when selling short or allowing your house to be foreclosed. It is highly recommended that you consult with an attorney before deciding it to sell short or let the bank foreclose.

How can Rick help?

Rick has in depth knowledge and experience in the process of buying and selling short sale property. He can give you general information regarding potential tax and deficiency consequences and help you explore what options are available for you. For more information, feel free to call or text Rick at 480-204-1228 or rrhoden@cox.net, or fill out the consultation form below.