Short Sales, you’ve heard the term but what does it mean. Individuals who are behind on their homes or have high mortgage debt have been advised to do a short sale on their property. Yes there are many advantages to doing a short sale on a property but their may be some consequences that debtors may not be aware of. Here is some basic information regarding short sales in Miami Florida.
Short Sale Basics
The basic way to understand a short sale is that you sell your home for less than what you owe on it and doing so you get the bank to agree not to try and collect or sue you for the balance.
Example:
Mortgage balance $300,000
Home Valuation: $100,000
In the above example the property owner would sell their home for the going rate: $100,000 and if they get a proper short sale the bank would agree not to sue on the deficiency balance or $200,000 remaining on the note.
Short Sales Without Bank Consent to Waive Deficiency
In order to gain the benefit of a short sale you will need to get the BANK to agree to forgive or waive any deficiency balance left on the note upon the sale of the home. I have seen numerous cases where the realtor doesn’t obtain the deficiency waiver in writing and the sale of the property gets no relief for the debtor. MUST BE IN WRITING.
Short Sale with Two or More Mortgages
A very difficult situation on a short sale arises when there are two or more mortgages on the property. Here the seller, with the guidance of a realtor or an attorney, will have to negotiate with BOTH mortgages to waive deficiencies and to get them to agree on the short sale.
Tax Implications
When attempting to do a short sale it is vital that you seek the advice of a qualified CPA regarding any tax implications that may arise out of the transaction. Sellers may not be aware of the tax burden that they face when they allow the property to be sold in a short sale.
If you are thinking of attempting a short sale in South Florida and would like to speak with an experienced realtor and attorney then please contact Shmucher Law, PL and attorney Ofer Shmucher. We offer free consultations seven days a week and can be reached at 954-309-5559 or 305-741-5553, or contact Ofer Shmucher.