Short Sale May Provide Option to Foreclosure; Assist-2-Sell Owner Uses Experience to Help Local Homeowners

St. Augustine, FL, March 27, 2008 --(PR.com)-- With recent changes in the real estate market, many homeowners have found themselves in a tough financial situation. The “nothing-down” 80/20 mortgages that were used to purchase homes over the last few years may have made sense at the time, but now those homes may be worth less than what is owed due to declines in market values. Unfortunately, some homeowners can’t wait for the problem to resolve itself; they need to sell now, either because of financial hardship, job loss or divorce, or because they need to relocate for a new job.

One option for a home seller is a “short sale.” A short sale occurs when the net proceeds from the sale of a home are not enough to cover the seller’s mortgage obligations and closing costs, and the seller is unable to cover the difference.

For the lender to agree to a short sale, the homeowner needs to provide a financial statement demonstrating a true financial hardship. Since the short sale process involves a lot of detailed paperwork, problem-solving skills and persistence, a homeowner should utilize a real estate professional who understands the process to achieve a successful conclusion.

Some “upside-down” home sellers think they can’t afford a real estate broker, so they try to sell the home on their own. Many don’t realize that in a short sale, the lender pays the broker’s commission.

The REALTOR®’s job is to negotiate for the home seller and show the lender that it is in the lender’s best interest to accept the short sale versus foreclosing on the property. Obviously, lenders don’t like to take less than what they are due, but they also don’t like to foreclose a non-performing loan. There are legal costs, repair costs to the property, remarketing and carrying costs, and the uncertainty of getting the highest price in a market already flooded with inventory.

In a short sale, the home still needs to be placed on the market, a buyer needs to be found and a bona fide offer received. Without a viable purchase offer, a short sale proposal won’t be considered by the lender.

If the lender does agree to the short sale, the homeowner will not receive any money at closing, since the lender is accepting less than what they are owed. However, the homeowner will be able to avoid a foreclosure on their credit, which is a lot harder to clear than slow-pays. The lender could, but doesn’t always, pursue a deficiency judgment against the owner, or some lenders may, as a condition to the short sale, ask the seller to sign a promissory note for all or part of the difference between the proceeds of the short sale and the debt obligation. Homeowners also need to be aware that a short sale is considered a “forgiveness of debt,” which may be viewed by the IRS as taxable income to be reported.

A short sale is one way, with the help of a knowledgeable REALTOR®, to relieve the financial strain on families due to changes in the housing market.

Mike Carter is the owner and broker of Assist-2-Sell Buyers and Sellers Realty in St. Augustine, Fla. Assist-2-Sell, North America’s Leading Discount Real Estate Company(SM), provides home sellers with full brokerage services for a low, flat fee, saving consumers more than $800 million in commission.* Home buyers also have access to a full range of services, including Assist-2-Sell’s exclusive listings databases. All brokers and agents are fully licensed and REALTORS®. On the Net: www.jaxhomeinfo.com.

*Savings based on statistics since January 1, 2000, for all Assist-2-Sell® offices in North America, compared to paying six percent commission. Six percent used for comparison purposes only. Commissions may be negotiable and are not fixed by law.

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