LOFT & CONDO LISTINGS DOWNTOWN L.A. [MAP]
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Downtown Loft and Condo Short Sales
Distress Sales Below Market
While short sales are currently few and far between in Downtown, they still pop up once in a while when a homeowner has a financial problem on a home that was overpriced when previously purchased.
A short sale can happen any time that a seller needs to sell a home for less than what the seller owes on the property. The lenders must sign off on the sale, which can delay or prevent a successful transaction.
Short sales are not short. They typically take twice as long as the average sale, or longer. A few years ago, it was not uncommon for a short sales to take more than 6 months to close.
HOME BUYERS: Get Downtown Short Sales, Foreclosures and Distressed Lofts in your email as soon as they come onto the market or earlier. Fill out my online form.
HOME SELLERS: Before deciding to do a short sale, consider the following:
- What is it about your current financial situation that has you considering selling short?
- Do you know the ramifications of a short sale on your credit report?
- Do you understand that there is a possibility that the short sale will not relieve your debt obligations?
- Have you met with a housing counselor, a financial advisor, or an attorney?
- Have you considered alternatives to a short sale?
Short sales are not for everyone.
Not everyone will qualify for a short sale. To qualify for a short sale, the following are some of the requirements:
- The home must have decreased in market value.
- The loan is in default, or will be soon.
- The seller must be able to demonstrate a bona fide hardship, such as one of the following:
- Unemployment
- Reduced income
- Business failure
- Damage to the property
- Death of a spouse or a wage earner
- Severe illness/medical emergency
- Large tax bill
- Divorce/separation
- Relocation
- Military service
- Mortgage payment adjustment to an unaffordable amount
- Large debt, no assets, bankruptcy
- Incarceration
4. The seller has no assets.
Short sellers should then contact a short sale specialist Realtor(R), who may ask some the
Tips and Rules for Short Sales:
- An O&E (preliminary title report) should be obtained early in the short sale process to determine ownership and encumbrances.
- In a short sale, the seller must accept and the lender must approve the offer.
- With a short sale, the listing agent will prepare the CMA with the lender in mind.
- Try to secure your seller’s cooperation in the short sale process early on.
- Short sale packets should be thorough and in the form the lender wants.
- The seller’s hardship letter should concisely demonstrate the seller’s financial plight, and how the seller came to be in the current situation.
- Short sales must be at arm’s length; there can be no undisclosed relationships between any parties to the transaction.
- When dealing with the lender’s short sale lender it is important to be polite, professional and prompt.
- After approval is met on a short sale, the parties should do their utmost to meet all terms, including the closing date; failure to do so could cause the lender to retract its approval.
- Lenders will frequently start foreclosure proceedings even while the short sale request is being evaluated.
- Even when the lender approves the short sale, it doesn’t mean the seller won’t have to make up the deficiency in the debt repaid.
- When a lender forgives a short sale seller’s debt, the lender will file a 1099-C, which is a Cancellation of Debt. This could mean the debt will become taxable; sellers should be advised to check with their accountant.
- There are two main categories of short sales: approved, and third party required, each with different timelines.
- When evaluating an offer on a short sale, the lender will look most strongly at the buyer’s ability to close.
- Two types of mortgage fraud are property fraud and fraud for profit.
- Flopping is a means of artificially lowering the perceived value of a property to purchase it and make a quick profit; it is a form of mortgage fraud.
- Any transactional funds should appear on the HUD-1; if they do not, it could be mortgage fraud.
Sellers: The first step is to get a free online home evaluation. Fill out my online form.
