Houston Short Sale Site

Do I need to hire a Short Sale Mitigation Company?

No! And, BEWARE of any Short Sale or Loan Modification Company who tries to charge you an up-front fee. When The Katie K Team at RE/MAX Northwest is your agent for a short sale transaction, there is NO Up-Front fee and all of our fees are paid at close of escrow by proceeds made available by your bank lowering the mortgage balance. You pay nothing to us for our services... and, you pay nothing for any of the other closing costs! 

What is Required for a Real Estate Short Sale? 

In order for us to get a real estate short sale accepted for you, we first must list your home “For Sale”. The lender will require that the home be marketed with a Realtor to ensure that the property is effectively marketed.

As soon as possible after signing the listing, you will need to provide the following documents to our loss mitigation consultant so that we may package a real estate short sale request to your existing mortgage lender(s):

Last two years tax returns with W-2's and any tax schedules

Most recent two months of pay stubs

Most recent 2 months of bank statements for all accounts, including retirement accounts, 401k.

Current mortgage payment coupons for existing mortgages

Copy of original mortgage note and deed of trust

With these documents we create a package as to why you require a real estate short sale and submit this to the appropriate department at your lender, once we have an accepted purchase offer for your home.

Getting Started

The short sale process can be a long and complicated affair. The good news: homeowners can designate an agent to communicate with their mortgage company, meaning an experienced professional can work on your behalf from start to finish. So what does the process entail?

3. Be patient.

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What's the Risk?

Will I still owe the bank after the short sale completes?

In a short sale, the bank's net proceeds from sale does not cover the seller's principal mortgage balance - the dollar amount is referred to as the short amount. The seller may be responsible for this short amount in one of two ways: as remaining debt to the bank, or as a tax liability.

Most banks today opt for the tax liability route, in which case the seller receives a 1099 tax form in January following the sale. The 1099 form shows the short amount from the sale as ordinary income for the seller. The good news is that current tax law offers several exceptions for this type of tax -- check out the IRS Web Site, particularly the Mortgage Forgiveness Debt Relief Act of 2007, which provides a tax exception for principal residences (among other items). Talk to your CPA for more info!

The bank also has the option to pursue a deficiency judgment against the seller to address the shortage. This is the same type of judgment that can follow a foreclosure, where the bank sues the homeowner for the deficiency. It's important to note that the seller cannot be hit with both a deficiency judgment and a 1099! The bank must choose one of these options -- and it's up to the homeowner (or their agent) to make sure the bank properly discloses their intentions. When we handle a short sale listing, our standard practice is to demand a release from the bank showing "payment in full without pursuit of any deficiency judgment".

How does a short sale affect my credit?

One of the biggest benefits for a short selling home owner relates to credit reporting. Instead of the dreaded foreclosure stamp on their credit report, most short sale accounts are marked as settled. The significance? A drastic improvement in the seller's chances of obtaining mortgage financing in the near future. Based on lending guidelines of February 2009, short sellers may be eligible for a new mortgage after (2) years. A foreclosure carries a 5-year penalty for conventional (fannie mae) financing.