Even though the Irving Las Colinas real estate market is heating up, some homeowners still find themselves upside down and are trying to avoid losing the property by short selling their home.
Short sales are a sale where the homeowner asks the bank to cover the “short” between the sales price and the mortgage amount. For Instance if a homeowner purchased a property in Irving for $200,000 and paid 5% down the mortgage amount would be $190,000. If that homeowner is trying to sell the property but the current market does not support the $200,000 price range the property may sell for less than the amount owed.
Let’s say the property gets an offer for $175,000, with closing costs and commission the seller would net approx. $162,500, well short of the current payoff. Many seller’s do not have the money to come to closing with the difference. In many cases the homeowner working with the Realtor and the bank can negotiate a short sale where the bank agrees to take a loss on the difference between the payoff amount and the net proceeds.
Short sales take quite awhile to negotiate, sometime close to 8 months in my experience. The process has been getting more streamlined and quicker as banks are doing more and more of these. Short sales may be a possibility for a homeowner in the position where they do not have money to bring to closing but it is a good idea to research the ramifications of a short sale and find out what if any tax issues may come up in the future and if the bank will be asking for a promissory note for the difference.
If you have any questions regarding this process please feel free to contact me.