Short Sales of PA Homes 

In current times some homeowners may find that they owe more then the home is worth when they go to sell it. In these cases a real estate expert may advocate using a “short sale”. This is not in length of time, but rather in taking the current value on the home so that some of the debt is paid.  An PA Short Sale expert in this can negotiate with the lien holders to reduce or eliminate the amount that the seller would have to pay out of pocket after the sale is made.

An alternative use for a short sale is as an alternate option to foreclosure. While using a short sale will impact the credit report of the seller, it is less harmful then a foreclosure report would be. The plus to using this method is reduced legal fees and costs to all parties involved. Those with liens usually ask the seller to prove hardship in repaying the existing liens before they will take a lessened repayment. Each lien holder, including primary mortgages, second mortgages, home equity credit lines, home owner associations, and others, may ask for individual hardship documentation.

A short sale approval from the various lien holders may take several months before all the approvals are met. Because junior lien holders must agree to terms and often time mortgage insurance firms are third parties to the process (due to them being asked to make up the difference), short sales have a high level of failure and run the risk of not going through before a foreclosure process begins.

It is important that the consultant understand both federal and local regulations in the process. A seller has several options for handling a short sale, including HUD approved non-profit consultants (which might not offer full short sale services), private debt negotiators that may charge fees for their services, and real estate agent PA who specialize in short sales.  To avoid fraud and have current information is it recommended that a HUD approved consultant be asked about current information and that this is checked with several other professionals in the area who specialize in this type of transaction.

There is risk to the short sale process. Because this is seen as a form of settlement on borrower debt, if reported it can make future chances of gaining a mortgage.  Some lenders will not approve a application for a loan from someone who has a short sale on their credit report. Additionally, after 2012 forgiven dept may be seen as borrower income and subject to being taxed by the IRS.

When might a short sale benefit the seller? Typically a person who has finical hardship should consult with an expert on their options before they start to default. This can save them a lot of heartache and keep the black mark of a foreclosure off their credit record. Since many real estate agents deal with these types of issues they usually know the local rules that need to be followed. Consult with a HUD counselor and your accountant also to determine the best course of action.

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