"REALTOR marketed....Professionally negotiated

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Q. What is a Short Sale? 
A. A short sale is when a lending institution accepts a discounted payoff amount on an existing mortgage and agrees to help the homeowner with closing costs to prevent a home from going into foreclosure. Often times a homeowner owes more than can be collected through the sale of the home. In this case, a short sale allows them to sell the property to avoid foreclosure for themselves and the lender. The lender typically gives consideration to a short sale when the homeowner experiences hardships like:
   
*unemployment  
*divorce  
*medical challenges  
*death of a spouse  
*property depreciation due to no fault of the homeowner

Short sales are uniquely beneficial to all parties involved: homeowners, lenders, real estate agents and investors alike. By accepting a short sale, the lender decreases their potential for loss and reduces the time to receive payment by a number of months. A short sale also minimizes the costs associated with foreclosures by the lender. Homeowners avoid permanent damage to their financial record while buyers benefit from a good deal on their newly-purchased property. Real estate agents are compensated for their work to get the property sold and investors, when involved, can receive an increased payback on their investment by making improvements to the home and later selling it at a price that matches its increased value.  

The key to the short sale process is timing. When a homeowner fears foreclosure is imminent, they must engage Us as soon as possible. Foreclosure proceedings typically start with a formal demand for payment in the form of a Notice of Default letter. Although timing of this notice varies by state, the lender typically issues it when the homeowner is three months delinquent on mortgage payments. Ideally, The Gafford Group should be contacted after one payment is missed and you have no means to make subsequent payments. Also, in many instances, lenders have what is known as a Pre-foreclosure Sale (PFS) Program. This program allows the homeowner in default to sell his/her home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed. 

The Gafford Group can quickly assess your situation and see how the short sale process can be put to work for you.

Q. What are the biggest road blocks?
A. When marketing the property, tenants are always the biggest road block. If you are not paying the mortgage, you should not be collecting rent. Move them out before listing the property.

 When negotiating the deal, mortgage insurance companies are the biggest hurdle. They have to pay the bank a lump some in the case of default, and often this amount is less in foreclosure than it would be in a short sale. They are often asking for one time payments and or side notes to make up the difference. You may have mortgag insurance and not even know it, as the banks sometimes secure it after the fact.

Q. What happens to me financially if the bank forecloses on my Las Vegas property?
 A. First you will be notified that your house has been foreclosed on. You must vacate the premises immediately. Failure will result in the county Sheriff evicting you from the property. Once the bank takes possession of the property they will begin to market it as a REO. (Real Estate Owned property) Upon successful sale of your property, the bank will more than likely have a deficiency between what you originally owed and the final Net disposition number. The Bank has a legal right to obtain a deficiency judgment for the difference. At this point, they can garnish your wages.

 Q. What do I have to pay at closing?
 A. It is possible the bank or mortgage insurance company may request you either bring a one time payment to closing or sign a "side note" paying off some of the difference over a period of time. We do our best to avoid these situations, but they are possible.

 Q. Do I have to pay the REALTOR?
 A. No. All of our fees are paid by the bank as part of the short sale.

 Q. Can I make any money off the sale of my house?
 A. No. All proceeds will go to the bank.

 Q. Is it a good idea to not use a REALTOR and do a private sale with an individual?
 A. No. If you submit a private offer to the bank, they will be less likely to accept it. A bank estimates what it will accept based on the "Market Value" of the property. If the home has not been listed on the "open market" the bank will have no reference point as to what the market will pay. If the property has been on the open market for three months listed and marketed by a REALTOR, and it has received no offers, the bank will be more inclined to accept an offer.

 Q. In a Short Sale what happens to my credit?
 A. Every bank reports differently. Most will report it as "settled for amount less than owed". The real challenge is the credit bureaus are trying to sort out exactly how this affects your score. I wish there was a more exact answer but this is purely speculative.

 Q. What is my tax liability?
 A. Currently a Bill is in the U.S. Senate ( H.R. 3648)  that will alleviate any tax liability created from a Short Sale on your primary residence. The president has already committed to signing it and it passed the House by a land slide. You can view the bills progress by CLICKING HERE. BUT FOR NOW...According to IRS Publication 908, Bankruptcy Tax Guide, income from cancellation of debt can be excluded from income on an individual's tax return if the cancellation takes place when the individual is insolvent.

Insolvency is when an individual's liabilities exceed their assets. Determine your liabilities and your assets immediately before the cancellation of your debt to determine whether or not you are insolvent. Most people in foreclosure are insolvent.

If you short sold your house and your lender did give you a 1099 for the amount forgiven, a form 982 (View it HERE) needs to be attached to your tax return. This shows that the cancellation of debt income is being excluded.

We are not CPA's and highly recommend that you speak to your CPA in regards to your situation. This is merely the strategy some of of other clients have used.Contact your own CPA for more information.

Q. What about a judgement after the fact? 
A. We will work as hard as we can to negotiate no future right to a judgement. However, some lenders are refusing to give up this right.

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 Q. How long does this take?
 A. It all depends on the amount of time it takes us solicit an offer and get the banks approval. Typically it will take 60 to 90 days.