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Short $ale

 A Guide To Understanding The Process

1. What Is A Short Sale?

 

It’s a transaction where two unique events must occur together.

  1. Net Proceeds Sale Loss

    A short sale occurs when your net proceeds from the sale
    is insufficient to cover your note balance(s).

  2. Lender Agreement

    The lender(s) agrees to release its mortgage lien(s) and note obligations on the home in exchange for payment less than the full loan balance.

  3.  

 

2. Why Would A Lender Agree To A Short Sale?

 
  1. Lender Loses Less As Compared To A Foreclosure

    The discounted payoff of the short sale must be less than the lender’s cost to foreclose.

    • Legal fees on foreclosure
    • Title closing of property
    • Holding of property until a successful resale
    • Maintenance of property until a successful resale
    • Commission & marketing cost of resale
    •  

  2. Seller Distress

    The lender will agree to a short sale if the seller can prove distress.

    • Seller is in default on mortgage
    • Seller can document financial distress
    • Seller has a firm sale which generates insufficient proceeds
    • Seller sale provides no net to seller
    • Seller proves current market comparables support sale price
    •  

 

3. Why Would A Seller Agree To A Short Sale?

 

Potential Seller Benefits

  1. It may have less impact on your credit rating as compared to a Deed-In-Lieu of foreclosure.
  2. Your lender may stop reporting missed payments to credit agencies.
  3. Provides more time for you to act in this difficult situation.
  4. You may buy another home sooner as compared to a foreclosure.
  5.  

 

4. What Must A Seller Do To Prepare For A Short Sale?

 

The following is a checklist of what you may need to gather to gain permission from your lender to authorize a Short Sale.

  • Hardship letter
  • Appraisal
  • Deed
  • Financial information worksheet
  • Statement of Assets & Liabilities
  • Net worth summary
  • Copy of property tax bill
  • Copy of 2 recent bank statements
  • Copy of 2 recent pay stubs
  • Copy of 2 recent IRS tax returns
  • Late bills summary
  • Medical bills
  • Divorce decree
  • Child support payments
  • Unemployment benefits
  • SSI income
  • Power of Attorney
  • Authorization to sell
  • Homeowner association information
  • Other to be determined by lender
     

 

5. What Is The Short Sale Selling Process?

 
  1. Seller signs listing agreement with real estate agent subject to selling as a short sale with third-part approval.
  2. Agent finds buyer who offers less than note owing.
  3. Seller accepts buyer’s offer.
  4. Seller’s lender accepts buyer’s offer.
  5. Transaction closes when the buyer delivers the funds, the lender releases the lien, and the seller delivers the deed.

 

6. What Are The Qualifications For A Short Sale?

 

If you cannot answer yes to all four questions, you may not qualify for a short sale.

  1. Has The Home’s Market Value Has Dropped?

    Appraisal validates and substantiates home is worth less than the unpaid balance due on the note to the lender.

  2. Is The Mortgage In or Near Default Status?

    Many lenders are will help homeowners even though there are not actually in default. You will need to consult your lender to determine their position on short sales.

  3. Is The Seller In Hardship?

    You must submit a letter of hardship explaining why you cannot pay the difference due upon sale, including why you have or will stop making the monthly payments.

  4. Does The Seller Have No Assets?

    The lender will want to see a copy of your tax returns and a financial statement. If the lender discovers assets, the lender may grant the short sale but could require seller to pay back all or part of the deficiency.

 

7. What Does Not Constitute Hardship?

 
  1. Bad Purchase Decisions.

    Blowing your paycheck on a car stereo system with surround sound does not qualify as a hardship.

  2. Unhappy With The Neighbors

    This does not qualify as a hardship.

  3. Buying Another Home.

    The lender will not care if you have decided the home is no longer suitable for you or your family.

 

8. How Is A Short Sale Different From A Normal Sale?

 
  1. Marketing

    There is no difference. We’ll utilize our extensive marketing program.

  2. Buyers

    There is a big difference. Short sale buyers are price sensitive and driven.

  3. Home Pricing

    There is a big difference. Appraisal is based upon other short sales comparing apples to apples.

  4. Other MLS Agents

    They will know you are in short sale and will inform their buyers. The appraisal is included in MLS Confidential.

  5. Sale Impact

    Having buyers and agents fully aware of the short sale status increases the likelihood of a fast sale.

    This is exactly what we want given your financial situation and the decreasing property value trend now prevalent in the market.

 

9. What Are The Consequences of a Short Sale?

 
  1. Potential IRS Tax Consequences

    If the lender agrees to the short sale, the lender may possess the right to issue you a 1099 for the shorted difference due to a provision in the IRS code about debt forgiveness.

    • Many situations are exempt from debt forgiveness, according to the Mortgage Forgiveness Debt Relief Act of 2007.

      You should speak to a real estate lawyer and a tax accountant to determine the amount, if any, of short sale tax consequences.

  2. Deficiency Judgment

    The lender has the right to pursue a summary Judgment for the deficiency.

    Example:

    The bank was owed $300,000 and sold short for $210,000. The deficiency is $90,000. The lender sues the seller for the deficiency.

    Without the help of a good attorney, or loss mitigation company, this is far more likely to happen. Therefore you must act in advance in efforts to prevent this issue from happening on your short sale. 

  3. Blemished Credit Record

    Short sales will show up on credit reports as a pre-foreclosure in redemption status. Depending on your lender, it may or may or have the same impact as compared to a foreclosure. The typical short sale will affect credit up to 2 years, while a foreclosure 5-7 years.

    Seek Specific Relief

    However most creditors may not make the distinction when reporting unless you seek specific relief. This is why a good attorney, or loss mitigation company, who specializes in the short sale process is well advised. 

 

10. Which Is Better, Foreclosure or Short Sale?

 
  1. Both Hurt But A Short Sale May Be Better

    Fannie Mae: August 2008

    Due to the increased incidence of preforeclosure [short] sales, Fannie Mae is establishing a 2-year elapsed time period for reestablishing credit following completion of the action.

    A foreclosure client must wait 5 to 7 years, maintain at least a 680 credit score in the sixth and seventh year, and pay a minimum 10 percent down on future home purchase.

 

11. What Are The First Steps To A Short Sale?

 
  1. My Role

    As a Realtor I cannot give you legal or financial advice as both fall outside my area of expertise and the scope of my license. It is for this reason I strongly recommend hiring an attorney and a loss mitigation company before you make a final selling decision. The 3 keys to successful short sale are: disclose-disclose-disclose!

  2. Lender Requirement

    You must prepare and submit a Short Sale Approval Application Kit with your lender before you can begin selling as a short sale.

Our Office Location

  • Action Realty
  • 305 Martha Lee Dr.
  • Hampton, VA 23666

Contact Information

  • Office: 757-249-1400
  • Direct: 800-446-1137

Success Stories

  • What can I say except that, I am completely pleased with the full service provided to me by Weddy Carter of Action Realty. She knows when and how to take action! She clearly has the knack and sound judgment needed for guiding a quick and fruitful home sale. She is an extremely dedicated hard worker who aligns with your needs precisely. She has an outstanding wealth of knowledge and a great eye for details. She most certainly delivers! This is my second transaction with Weddy and I will most likely utilize her services again!

    Diane Willis
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  • Weddy Carter and Action Realty were incredible in assisting us in locating and purchasing our first home. Weddy was extremely accessible and helpful, always more than willing to meet with us and answer our questions in a timely and professional manner. She was instrumental in ensuring that we found a home appropriately priced, was within our budget and more than meet our needs. Weddy went above and beyond her responsibilities to ensure our experience was fun, exciting, and successful! Weddy is an awesome person and I would highly recommend both her and Action Realty to anyone!

    Amber Mitchell
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  • I am very pleased with the excellent customer service provided by Action Realty. My assigned agent Weddy Carter was extremely professional and took care of every need. For example, when I needed specific things done to my home, Ms. Carter knew just the right person/business to call! Every reference of Action Realty responded to Ms. Carter by adjusting their schedules and accommodate all of my needs. I am extremely satisfied and have begun recommending Action Realty to others!

    Noel and Lydia Schneeberger
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  • Rachel is an awesome realtor I have already referred her to some people from us for their realtor. I was very pleased with her expertise and performance while selling my house. I hope we do business together again. You are a very special person and I want to say thank you again.

    Cheryle Watson
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  • My real estate agent Mrs. Carter is a true professional and always provided outstanding customer service. My Hubby and I really appreciate her efforts on selling the house. Mrs Carter made the entire process of selling the house completely stress free. Her hard work and dedication was instrumental in selling the house.

    John & Melissa Terry
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  • Our Agent was Weddy Carter and she was a dream come true. She was just what we needed. She gave us ideas to prepare our home for selling and explained everything to us in detail. She was available and returned all of our calls in a timely manner. I especially like the fact she kept us informed on the interest of buyers and walked my wife and I through the selling process.

    Mr. & Mrs. Callahan
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  • After meeting Weddy Carter five years ago, I knew that she would be the only one trusted person to sell my house while I lived several states away…Call it gut feeling! It was her strategic preparation plan coupled with years of experience and the great team she surrounds herself with that made a difference.

    Muminah Abdullah
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  • Working with Weddy has been a pleasure. She sure knows her stuff! Her professionalism and her advice were essential to the sale of our home. She was very proactive and advertised our home in every media possible. Weddy also kept us informed every step of the way.

    Ian & Rebeca Rosado
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  • Lauren made the process of buying a home so easy. She was on the spot with answers to all my questions and even found a great lender for me.

    Matt Morris
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  • One word to describe Weddy Carter as a realtor “Awesome”. Our home was on the market less than a week and we received a great offer. We closed in less than a month! Thank you Weddy for all you have done.

    Jeff Jeglum
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  • This experience was a joyful one for us. After 25 years in military service, our first home buying experience with Weddy could not have been better. Absolutely first rate!

    Steve & Barbara Schwaiger
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  • “Lauren was amazing!! She answered every question with knowledge. I could call her at anytime and she was happy to help. Thank you so much!!”

    Jaime Moore
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  • From day one David Washington has been completely comforting and made this an enjoyable experience. He was east to reach and willing to put in the time to make sure we found our perfect home.

    H. C. Redfield
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  • Weddy carter and Action Realty were incredible in assisting us in locating and purchasing our first home. Weddy was extremely accessible and helpful, always more than willing to meet with us and answer our questions in a timely and professional manner. She was instrumental in ensuring that we found a home appropriately priced, was within our budget and more than meet our needs. Weddy went above and beyond her responsibilities to ensure our experience was fun, exciting, and successful! Weddy is an awesome person and I would highly recommend both her and Action Realty to anyone!

    Amber Mitchell
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  • It is with much thanks that I say to you Weddy, that I am so grateful I had you as my Realtor. I feel very comfortable trusting you to deliver the type of service I needed during such an emotional time. You were everything I needed and more!

    Diane Willis
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  • As first time sellers, we were very nervous in regards to the entire selling process. Weddy Carter of Action Realty was the most professional, trustworthy and courteous realtor throughout the entire process. We couldn’t have asked for a better experience.

    Travis and Carla Williams
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  • Weddy Carter and Action Realty is the best we have dealt with hands down. The professionalism and “wanting to please” attitude is felt every step of the way. From the moment we walked in the door it felt as though we were family. This may be hard to believe, but it is true. We found a house in less than 10-days because of Weddy.

    Stephen & Maria Decker
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  • “Rachel was an absolute pleasure to work with! I went into the home buying process expecting to have to do all the leg work and for it to be stressful but Rachel did everything she could to ensure that the whole process was as easy as possible . Thanks to her I had a great first time home buying experience!”

    Chris Whatley
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  • Our Realtor was Lauren Borrelli. She was very knowledgeable and friendly. She was there every step of the way. I would definitely recommend her and Action Realty to my friends.

    Julio Larios
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  • Weddy Carter is the epitome of professionalism! She is an extremely knowledgeable real estate agent and she leads from the front. My home buying experience was fantastic and I give Weddy Carter all the credit. She worked out a really great deal for me and I am 100% satisfied with the service I received from my agent. Simply OUTSTANDING!

    Brian Mills
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  • Weddy Carter was the most professional and energetic realtor I’ve ever worked with! Her meticulous attention to detail, tireless effort and intuitive nature ensured that we found the right tenant to rent our home. She is an agent with a bundle of positive energy who is finely focused on obtaining superior results.

    Grant Thomas
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  • We made an excellent choice in selecting Weddy Carter as our agent to sell our home in “Farmington”. The property SOLD in two weeks!!! We were amazed by our agent’s professionalism, hard work and extreme attention to details which made the entire process stress free and seamless. We will always recommend Action Realty to anyone!

    Ruby Parks
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  • My agent Weddy Carter was a joy to work with. She is very knowledgeable and professional about her business. She is also very client friendly and if I needed anything I could call or email her and she would respond! Not only she would respond but she would take care of the matter right away. She is by far the best and would love to work with her again in the future.

    Klancy Friday
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  • It has been an extreme, seamless, pleasure working with Weddy Carter and Action Realty. She exceeded all of our expectations. She made selling our home very easy and worry free. We would highly recommend Weddy Carter to anyone who needs to sell a home fast! Not only she was our Realtor, but she became a friend! Thank you so VERY much!

    James & Christine Wainright
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  • We used the services of Mrs. Weddy Carter to purchase our first home in Newport News, VA in 2005 and we meet with great success in reaching that milestone. In 2007, we decided to sell that home and buy a newer home, we again went with Weddy Carter through the process and things went very well for us.

    Johnny & Lafondra Brown
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  • Lauren is and was very efficient and more than willing to show any property with little notice. I will be recommending her to family and friends.

    Frankie Bristow
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  • Rachel Lane was an outstanding agent to work with as she made our first time home buying experience stress free and enjoyable. She provided us with great guidance and helped educate us on anything we had questions about. Her positive attitude and enthusiasm made our home buying experience fun and unforgettable! We recommend Rachel and Action Realty with our utmost confidence!

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  • Weddy is very professional and easy to work with. The entire home buying process was made very simple and Weddy was AMAZING!

    Derek Welch
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  • ” Rachel was very helpful throughout the entire process, and still is after. She was very knowledgeable and answered any questions we had promptly. She was also very flexible with our schedules to show us properties. Any offer or proposal we had made she was quick to act, and get what we needed done and ready for us. She handled every situation very professional she was able to respond to us in an effective manor and help us close on the right house.”

    Tiffany and David
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  • Professional from start to finish is the service that we got. We could not have found a better Realtor than Weddy Carter. When we started the process, she left no questions unanswered. Every step of the way she kept us informed of what was going on. I personally like to use people that come recommended to me, but in looking for a Realtor this time I went with experience, reviews, and how fast she gets results.

    Annie & Anthony Scott
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  • We love our new house! Our Agent David Washington was amazing! He was very informative and explained the entire process very well. He answered all our questions whenever they came to mind. He was very pleasant to work with and made our home buying experience wonderful! We got the home we wanted at our terms! Thank you!

    Mr & Mrs. Littlefield
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  • Lauren was very helpful in helping us find a house. She answered any questions we had and was available day and night. I would recommend her to my friends and family!

    Christina Johnson
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  • Rachel Lane was very helpful by explaining and walking us through the home buying procedures and was so patient with us when we didn’t understand or if things didn’t go as planned. Her willingness to do whatever we needed/wanted helped our home buying experience go smoothly.

    Jeff and Melanie
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  • When my husband and I moved to this area we contacted Weddy Carter with Action Realty to assist us with the purchase of our first home. Weddy was exceptional and provided first class service! She is extremely knowledgeable in her field and walked us through the buying process and explained everything to us every step of the way.

    Aaron and Rosita Goodrum
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  • “Rachel, You did a great job! – Thank you.”

    Mr. Johnson
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  • Weddy Carter knows her job and took the time to make sure we were happy with the whole buying process. She is a true professional.

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  • This was our first home buying experience and it couldn’t have gone any better. David was always helpful and made this so incredibly easy for us. We were very pleased!

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  • Weddy Carter is #1 in my book. She listed my townhouse and it was sold in 3 weeks! That is amazing in today’s market. I would definitely recommend Weddy to anyone who is in the market to buy or sell a home!

    Cindy Lambert
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    You need…

    To sell or buy a home with a finger snap…Weddy Carter

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    Tammy was so supportive and offered assistant at every step along the way, needless to say we are very happy with the outcome. Our furniture arrived on July 4th! Tammy has continued to make us feel welcome to our new home with her follow up phone calls and email messages.

    We would be happy to recommend Action Realty and especially Tammy Daniels.”

    Gene and Jane Patterson
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