Kentucky And Louisville Short Sales- All You Need to Know

Short sales of real estate in Louisville, KY, are made when the property is worth less than the debt owed. You are offering the bank less than what is owed so someone can purchase it. A relative or insider can buy your home but often you have to prove that what is being offered is the best price the mortgage company will obtain. Property will often sell for 20 to 30% less than the assessed value for real estate in Louisville, Ky.  In order to for you to make a reasonable offer you just have to show you are offering more than what would be obtained at auction.

I don’t see any substantial advantage to the homeowner in attempting a short sale in Louisville, Ky unless you are attempting to keep the home in the family and a relative is purchasing the property.  Selling a home in the real estate market through a real estate agent requires a lot of work you are doing for free for the mortgage company.  Short sales require substantial proof that you are offering the lender more than they will get in foreclosure.  It is often cheaper to have that same relative purchase the home at the commissioner’s sale.

Short sales force you to do all the work for your mortgage company. Your credit receives virtually the same damage whether you short sale or have a foreclosure. Short sales require you to do all the work and the mortgage company will often not accept the offer for other reasons. You may submit a fair offer to the bank. But they will often refuse it or take months to accept it. Short sales are an effective tool to keep the home by eventually repurchasing it from the purchaser. It is called a white knight purchaser.  

The Issues that Complicate or Improve a Short Sale in Louisville, Kentucky

Servicers prefer to offer mortgage modifications that temporarily lower an interest rate.  If the homeowner offers a short deal, you must provide proof that your short sale is the highest price obtainable.

If there is a second mortgage, you must make two banks accept your offer. When two mortgages occur, the issue is that there is no advantage to the first mortgage to share less than what the home brings at foreclosure with the second mortgage company. The second mortgage company often refuses to accept a short sale unless they receive substantially more than a foreclosure brings them; also, you can check for the market report.

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The problem is always in convincing the lenders to accept a better deal than what they get at foreclosure. If the homeowner files bankruptcy and lists the property in bankruptcy as far less than the mortgage then the mortgage company seems to more easily accept a short sale. Filing bankruptcy convinces the lender that the homeowner will no longer retain the short-sale home. Then, the lender must take the time and expense of foreclosure or the immediate and better offer of a short sale after looking at the market report. The problem for the lender is that the home continues to report as a bad debt until there is resolution. It also costs the lender higher rates for the money it borrows to lend.

The Issues to Remember in Louisville Kentucky Short Sales

Remember the bank’s primary concern is what brings them the most profit, whether it’s from the short sale or the foreclosure sale.   

  1. Mortgage companies will look at similar sales of properties nearby or other homes for sale currently. 
  2. Servicers search other properties using a white picket real estate list to value short-sale property.
  3. Servicers will often resist the homeowner’s offer of a short sale.   
  4. Based on the past sales history and other short sales in Louisville, Ky for real estate your offer may be declined after working a very long time to have it approved.
  5. Your goal should be to make the most profit you can from either short-selling the property, defending the foreclosure or keeping the property.  

Advantages and Disadvantages to Short Sales in Louisville, Ky

A short sale can take up to a year for approval. It also often gets you out of the house sooner than staying in it by defending the foreclosure. Short sale properties often leave you owing a substantial tax debt even if you have an agreement to not owe the deficiency.  It can also definitely leave you owing for a deficiency; for any flaw, you can further search criteria for getting real estate short sales approved.  

The internal revenue service rules and regulations for short-sale properties require the mortgage company to submit the 1099-c for any loss. If you want to avoid a tax debt you must also search the criteria for 1099 liability. Regardless of any agreement you have with the mortgage company or what they tell you, you can’t get around the tax rules and regulations of the IRS. The reason for offering a short sale in Louisville, KY, is to have a slightly better credit file. The advantage is very slight. Many people are sold on the idea that they will avoid the 1099 problem after short sales. However, short sales do not avoid the 1099 tax problem. Only catching up on the mortgage or bankruptcy keeps you from tax liability in a foreclosure.

Still, there are situations where a Louisville short sale to a relative or insider allows you to stay in the property. Many of my clients let their homes go back in foreclosure if that is what is most profitable for them.  Sometimes keeping a home is a mistake.  They defend the foreclosure instead and live in it rent-free for 1 to 2 years until the sale date and file bankruptcy to avoid the tax problem and any possible deficiency.

Thinking About Short-Selling Your Property?

If you are soon going to go for a short sale, I can help you with the details and procedure. You must know who is there to help you in the matter and who is there to make a profit from you. Therefore, always go for a trusted attorney near you. 

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