Short Sales at the Delaware Beaches

For a complimentary consultation regarding the short sale process and if it is right for you, contact the Tull Realty Group today.

Overview

For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."

When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.

If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:

  • Obtain legal advice from a competent real estate lawyer
  • Call an accountant to discuss short sale tax ramifications
Sellers Guide

Benefit Guides

Sellers Benefits
Buyers Benefits

As a real estate agent, I am not licensed as a lawyer or a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

  • Call the Lender
    You may need to make half a dozen phone calls before you find the person responsible for handling short sales. You want to talk to a supervisor if possible.

  • Submit Letter of Authorization
    Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan.

  • Preliminary Net Sheet
    This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any.

  • Hardship Letter
    The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment.

  • Proof of Income and Assets
    It is best to be truthful and honest about your financial situation and disclose assets. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.

  • Copies of Bank Statements
    Several months of statements from all banks where you have accounts will be required by the lenders.

  • Comparative Market Analysis
    Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:

  • Purchase Agreement & Listing Agreement
    When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement.

Short Sales and the Beach

In the Delaware beach areas of Rehoboth, Dewey, Lewes and other beach towns, property owners may want to sell their properties but with the decline in market values, find they owe more on the property than it is worth. In these cases, some property owners have worked with their lenders to accept a short sale – the sale proceeds are less than what is owed.

While this area is not experiencing as high a volume of short sale activity as other areas in the country, we are seeing increasing numbers of properties being marketed and sold as short sales. Soon, the Sussex County MLS will be modified to allow agents to search for properties that are identified as short sales; this will allow buyers who wish to take advantage of these pricing opportunities to more specifically find short sale properties.

Pros and Cons

The short sale process is not for the faint of heart; a short sale can take anywhere from 3 months to a year to be processed and accepted by the lender (or multiple lenders in some cases). However, it can be a way to dispose of property that has lost significant value, reduce the impact to one’s credit record, and allow a buyer to purchase a property they otherwise may not have been able to afford.

Build a Team Around You to Help

We at the Tull Realty Group specialize in marketing and selling properties and will work with you closely – as a seller to obtain a contract on your property and as a buyer to write a winning offer on a short sale listing. We are a part of the Sotheby’s International Realty® network and one of the top real estate teams in the Rehoboth area.

We recognize the special skill sets needed to facilitate a short sale, and partner with CK Capital Management to help our clients prepare for and complete a short sale transaction. CK Capital Management is one of the leading short sales service providers in the industry, and they have been successful in helping Tull Realty Group clients close short sales.

We also recommend you consult with an attorney and a CPA to understand the potential legal and financial/tax ramifications of buyer or selling a property through a short sale process. Upon our initial consultation, we are happy to provide you with contact information on several area professionals to contact.