A short sale occurs when the proceeds from selling a home are less than the amount owed on the mortgage and the lender agrees to accept less than full payment. Lenders agree to short sales because it costs less than foreclosure. Sellers agree to avoid a foreclosure, which has a larger negative impact on their credit. The short sale process involves determining the home's value, marketing it, getting an offer, negotiating with the lender, and closing escrow if approved. Those who qualify have proven financial hardship and the home is worth less than what is owed. While it affects credit scores less than foreclosure, there may be tax implications if debt is forgiven.

1. Realty Connections Understanding Short Sales

2. What is a Short Sale? In a short sale, two events must occur at the same time: Net Proceeds Sales Loss This occurs when the net proceeds from the sale of your home isn’t enough to cover the balance owed on your loan(s). Lender Has To Approve/Agree Your lender(s) has to agree to accept less than the full payment on your loan(s).

3. Why Would a Lender Agree to a Short Sale? A lender loses less money on a short sale. The short sale must cost less than it would for the lender to foreclose. Fees Associated With a Foreclosure Legal fees to foreclose on property Title fees to foreclose on property Lost payment and interest on property until it is re-sold Maintenance of property until it is re-sold Agent commissions Seller has a proven hardship Governmental Pressure and Bailout Money

4. Why Would a Seller Agree to a Short Sale? Mortgage Debt Forgiveness Relief Act - 2007 Less impact on credit score Can repurchase another home sooner

5. What is the Short Sale Process? We determine the current market value for your home and we place your home on the market. We network with our group of investors and obtain a CASH offer. Conventional, FHA, VA offers are not turned down but if we can obtain a CASH offer, banks are more likely to APPROVE the offer as the possibility of the deal falling through for financing reasons or simply because the process took SO LONG that the BUYER has purchased ANOTHER property. Homeowner ACCEPTS offer. Lender ACCEPTS or COUNTERS offer. Escrow is scheduled to close VERY SOON thereafter. During the process, we will assist you in finding another home to rent.

6. Who Qualifies For a Short Sale? Homeowners that can prove that the CURRENT MARKET VALUE of their home is less than the balance they owe. Current PAYMENT STATUS? Getting close to missing a payment, already missed a payment(s)? Homeowners that can prove that they are in a FINANCIAL HARDSHIP. Homeowners that can prove that what they OWE in creditor debt (total balance owed to include mortgage) is MORE than their combined assets.

7. What Qualifies as a Financial Hardship? Job Loss Reduction in hours and/or pay Death Medical Diagnosed Illness Divorce Bankruptcy Family Size

8. Are Their Any Consequences? IRS Tax Implications – Your lender may issue you a 1099 for the amount that is equal to the difference between the balance and short sale price. Deficiency Judgment – Your lender may file a judgment for the amount that is equal to the difference between the balance and short sale price. Blemish to your credit report – A short sale will show up on your credit report as a “Pre-Foreclosure in Redemption” status and will usually stay on your record for 2-3 years affecting your credit score approximately 40-60 points as opposed to a Foreclosure which will affect your score approximately 200-300 points and stay on your record between 5-7 years. You Lose Your Home

9. What Are Some Positives? You Lose Your Home – The market was so inflated when you purchased your home, it will possibly never appreciate to a value where you will have EQUITY! Remember, this is why you and millions of Americans purchased a home during this BOOM. You can PURCHASE a home SOONER. LESS of an IMPACT on your CREDIT RECORD. You can possibly take advantage of the market yourself if you TAKE ACTION!

10. How We Can Help Get you out of a home that will most likely never recover in value. We are your CASH buyers. Shorten approval time-line. Stop the bleeding and put you back on track to financial recovery. We have options to get you into another home. Mortgage Assignment Lease Option Agreement Private Money Loan Take advantage of market conditions and purchase another home at the right time to buy a home.

11. What’s The Next Step? You need to sign a Listing Agreement and all Required Seller Disclosures. You need to gather various documents that are listed on our “Documents Checklist” which we will provide. Your home’s information needs to be uploaded into the MLS and we need to submit your paperwork to our processing department. We need to communicate with our investors and to obtain a written CASH offer. We can usually get your home sold within 48 hours! Once an offer is obtained and your file is complete, our processing department will submit your file to your lender(s) and begin negotiating the short sale. If the package is declined, we will work with you and/or the buyers to work on re-submitting a package that the lender(s) will approve. If the package is approved, written verification will be obtained, the close of escrow will be scheduled and everyone will work cooperatively to ensure a smooth close.