Short Sale in Montebello

BY MIKE LANDFAIR

The housing crisis left many homeowners owning a home in Montebello making payments on a house that wasn’t worth the original buying price. Faced with the possibility of foreclosure, a short sale in Montebello is an alternative. A short sale in Montebello occurs when the bank accepts an offer on your home that is less than what is owed on the mortgage.

For example, let’s say you owe $300,000 on your home, and the market value is $250,000. Our short sale in Montebello agent team lists the property for sale, and receives an offer of $250,000. The name short sale comes from the fact that we are “shorting” the bank $50,000. In doing so, your lender will “forgive” the debt and allow you to move on with your life.

Why would a bank do that? A typical foreclosure will cost the bank anywhere from $15,000-$30,000 in legal fees, maintenance costs, utilities, etc. With a short sale in Montebello, there is no out of pocket cash and instead the bank receives money, and they don’t have to own the property and maintain it.

The two most popular questions:

What about the deficiency? Will the bank come after me?

In many states, the lender can seek a personal judgment against you after the short sale to recover the deficiency amount. Generally, once the lender gets a deficiency judgment, it may collect this amount (in our example, $50,000) from the borrower by doing such things as garnishing your wages or levying your bank account.

A few states, however, do prohibit deficiencies after short sale, such as California.

When negotiating with your lender for approval of your short sale, ask the lender to waive its right to seek a deficiency judgment. If your lender agrees, this provision must be included in the short sale agreement. The agreement must expressly state that the transaction is in full satisfaction of the debt and/or that the lender waives its right to the deficiency.

If your lender refuses to waive the deficiency, you can offer to settle the deficiency for a smaller amount.

What are the tax consequences of debt forgiveness? There may be tax consequences on the debt that is forgiven. The IRS treats debt forgiveness as income, however if the discharge was directly related to a decline in your home’s value or your financial condition, you may be ok. Only a tax professional can answer specific questions.

The number one goal of the professional you use to execute a short sale in Montebello is to do everything in their power to make sure the homeowner is absolved of any potential deficiency issues. Find a professional that has an attorney and a CPA on their team to help not only with deficiency issues, but tax consequences as well.

Red Hill Real Estate Solutions, LLC. is here to help homeowners out of any kind of distressed situation. As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, up front costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.

Give us a call today at 951-356-5440 to let us know what YOU need help with!

Ron Calderon, Red Hill Real Estate Solutions, LLC., investments, short sales, REO, distressed, foreclosures, loan, loan solutions, sell house quickly, East LA