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FAQs

For over 15 years, Sam Realty has helped to buy a great number and variety of homes in metropolitan Orange County for our clients. We’ve brokered Pelican Hills homes, Crystal Cove real estate, Corona Del Mar real estate and many other prime residential properties in the area. But for many couples and families in recent times, during the regional and U.S. economic downturn, jobs have been lost, the cost of living has soared and homeowners have been left with dire choices to either foreclose on their house or find a better alternative. Well, we’re here to help. That’s what Sam Realty does for all of its prized clients. And we have an answer.

A significant and positive alternative to home foreclosure is a short sale. Short sales simply are home sales that render less than what is owed to a lender on a home mortgage. A short allows a homeowner to halt the payment process in its tracks safely. Many banks will require borrowers to pay the difference owed, while some short sale deals allow borrowers to break free from the debt after their home is sold through the bank below market value. Ultimately, a short sale, which can take a number of months to process, depending on home markets and other factors, can reduce a homeowner’s credit score somewhat. Many who choose a short sale, however, can often resume homeownership within a few years and repair their credit relatively rapidly during that time.

Sam Realty has compiled a list of Frequently Asked Question that many homeowners have asked us over the years. Here, we provide the answers that will help put you on the path to the safe short sale of your home.

Q?Is a short sale the best choice for me?
A.

Short sales can often be complex and take time to process. Each short sale is different for every homeowner. Whether you own vast Newport Beach luxury real estate or a tiny piece of Shady Canyon real estate, your short sale and financial circumstances will affect how easily or difficultly a lender will enter into a short sale agreement with you. Sam Realty is happy to review your case and needs in detail to find the very best short sale solution for you. You may qualify if you have filed bankruptcy; your company went under; you have staggering doctor’s bills; you lost your job; your husband or wife has died; were divorced or sent to prison.

Q?How will a short sale affect my credit?
A.

For those who are forced to foreclose on their home, the credit consequences can be heavy. Credit ratings for such homeowners drop up to fur hundred points or more, in many cases. For those who chose a short sale, however, the option are much better. When you work with a lender that approves a short sale and you have worked out a reasonable deal, then this agreement is sent to the credit bureaus and looked on favorably. Short sales only reduce credit ratings by up to a hundred points or so, which is much more reasonable. If you have stopped paying your mortgage and are late by, say, one to three months or more, you will inure more credit damage. Luckily, we can still help you work with negotiators to achieve short sale status when you do continue to make payments. When the short sale is eventually made, you may be able to secure mortgage with good interest rates for another home within a two years.

Q?Will I owe taxes for the difference owed of a short sale?
A.

All cases are different, though, by and large, the difference that you owe for a short sale home mortgage is taxable as income. Between the periods of 2007-2012 – homeowners who chose a short sale did not have to pay taxes on the difference owed, however, this has changed as of 2013 both locally and nationally.

Q?Will my bank be able to recoup all of the loan difference that I owe?
A.

If you bought your house with what is known as a non-recourse loan from the bank, then that lender can’t seek the difference that you owe if processed out of court when you declare a foreclosure. For a short sale, however, the California civil code does not address non-recourse loans, so you may have to pay what is owed, depending on what your attorney can resolve. In the end, it is our goal to help you secure a notice from the lender that provides you freedom from paying back the difference owed.

Q?If the difference owed must be paid, why should I choose a short sale of my home?
A.

First of all, you can stop paying the monthly mortgage that you owe, which is a huge relief for many. In many cases, you can actually defer the payments that are still owed, depending upon the deal that you make with the bank. When you chose the short sale option, the bank recognizes this as the better, accountable thing to do, which affects the short sale notes, which accompany the record to the credit bureaus. If you sell the home and it does well, the lender, will, of course be happier than a foreclosure. It also costs a lot of money to foreclose a home, ironically. Many attorneys and specialists have to be paid to eliminate a home that way.

Q?Should I choose a second home mortgage or a home equity line of credit when considering a short sale?
A.

If you are able to secure a second home mortgage, it will likely be eliminated if it depends on your ownership of the house and you have to sell it through the bank as a short sale or foreclosure.

If you are able to secure a home equity line of credit, on the other hand, even if your lien is eliminated for a foreclosure, you still get to maintain the credit line.

Q?What will a short sale end up costing ultimately?
A.

Luckily, the lender will cover our costs as well as fees that are incurred when your home is sold. Our team will also seek to erase past property taxes and home owner’s association dues and others costs.

Q?Can I continue to make mortgage payments when I initiate a short sale?
A.

Yes, in many cases. We work to help craft a deal with lenders so that you can continue to make payments, which will help your credit score. Many major lenders, however, insist that you must skip payments to begin a short sale or foreclosure process. Together, we will carefully review lender policies to help you make the right decision.

Q?At what time do I begin a short sale and how long does is it?
A.

The sooner, the better because short sales can often take time and are complex. If our team can work with the bank and make a reasonable and formal [presentation that favors your scenario, then we can achieve the best results. Remember that a short sale can take many months, depending on the ale market, your bank policies, and other outstanding loans. We strive to sell your home and get you back on track within a few months or less.

Q?Why would my bank provide me with a short sale contract?
A.

Short sales are largely better than foreclosures. The fees and costs incurred can be great for foreclosures, so the bank wishes to cut its losses sooner than later and get the house on the market and out of the way fast. Short sales present less overall loss.

Q?What is a loan modification and is it a good alternative to a short sale?
A.

A loan modification enables you to change the terms of your home loan to work with your budget and new needs. Most banks will work with you directly, while we suggest proven, licensed, third-party loan mediators to help work out a deal, if wish to retain your house. Qualified mediators will help keep your credit clean in the process.

Q?How do I begin the short sale?
A.

Call the Sam Realty Group, so we can review your case and you’re your short sale started today!