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What is a Short Sale in Tampa?

Greater Tampa Bay Short Sale, Florida Short Sale ProcessAlso See:  Foreclosure Solutions   |   Short Sales Explained   |   Short Sale FAQ

A Tampa short sale is when the homeowner sells their home for less than what it’s owed on their loan, and the lender accepts the amount as the payment in full. The homeowner must demonstrate they are currently in a financial hardship and unable to continue meeting their obligation.

The Tampa short sale process is still lengthy and it involves many hours of follow up with the lenders and your Tampa short sale realtor will help you throughout the short sale process. That’s why it’s very important to hire a Tampa real estate professional who is not only experienced in a short sale but also, familiar with Florida short sale laws and process.

Short Sale Process In Tampa Florida: How To

Short sale process in Tampa Florida can vary depending on lenders and Florida short sale laws that apply. The general Florida short sale process is:

  1. Find a short sale Realtor® to help complete the short sale package which includes including a hardship letter, 2 years of tax returns, W-2, a personal financial statement, 2 months bank statements
  2. List your home for sale with your real estate agent.
  3. Obtain an Offer and submit a proposal: You will need to approve the offer first and submit it with the proposal packet to the lender for an approval.
  4. Negotiate the deal: We will negotiate with your lender(s) and get the acceptance letter.
  5. Close the Transaction: Typically, the deal must close within 30 days of the lender’s acceptance. Buyer has to be ready with cash or funding.

Tampa Florida short sale process can be very tricky and hard to understand. However, if done correctly, it can in fact be the best option and fresh start for you.

Tampa, Florida Short Sale Process: Why You Should Consider

A short sale negotiation resulting in a reduction of the amount a borrower owes towards a debt acts as a type of settlement or renegotiation of a borrower’s debt. Should the creditor report the debt reduction to credit reporting agencies it can adversely affect a person’s credit report.

The Results on credit scores are much better than a foreclosure. With the new Fannie Mae Guidelines, a homeowner can purchase another primary property after 2 years of a short sale agreement, instead of 5 years, or more, with a foreclosure

Short Sale Process In Tampa Florida: What to Do When the Sale Price Leaves You Short

If you’re thinking of selling your Florida home, and you expect that the total amount you owe on your mortgage will be greater than the selling price of your home, you may be facing a short sale. A short sale is one where the net proceeds from the sale won’t cover your total mortgage obligation and closing costs, and you don’t have other sources of money to cover the deficiency.

A Tampa Florida short sale is different from a foreclosure, which is when your lender takes title of your home through a lengthy legal process and then sells it.

Consider Loan Modification First

If you are thinking of selling your Florida home because of financial difficulties and you anticipate a short sale, first contact your lender to see if it has any programs to help you stay in your home. Your lender may agree to a modification such as:

  • Refinancing your loan at a lower interest rate
  • Providing a different payment plan to help you get caught up
  • Providing a forbearance period if your situation is temporary

When a loan modification still isn’t enough to relieve your financial problems, a Florida short sale could be your best option, if:

  • Your property is worth less than the total mortgage you owe on it.
  • You have a financial hardship, such as a job loss or major medical bills.
  • You have contacted your lender and it is willing to entertain a short sale.
Hire a Qualified Team

The first step to a Tampa short sale is to hire a qualified real estate professional and a real estate attorney who specialize in short sales. Interview at least three candidates for each and look for prior short-sale experience. Short sales have proliferated only in the last few years, so it may be hard to find practitioners who have closed a lot of short sales.

You want to work with those who demonstrate a thorough working knowledge of the Tampa short sale process and who won’t try to take advantage of your situation or pressure you to do something that isn’t in your best interest.

A qualified Tampa real estate professional can:

  • Provide you with a comparative market analysis (CMA) or Broker price opinion (BPO).
  • Help you set an appropriate listing price for your home, market the home, and get it sold.
  • Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit and some now require, that the short-sale status is disclosed to potential buyers).
  • Ease the process of working with your lender or lenders.
  • Negotiate the contract with the buyers.
  • Help you put together the short-sale package to send to your lender (or lenders, if you have more than one mortgage) for approval. You can’t sell your home without your lender and any other lien holders agreeing to the sale and releasing the lien so that the buyers can get clear title.
Begin Gathering Documentation Before any Offers Come in

Your lender will give you a list of documents it requires to consider a Florida short sale. The short-sale “package” that accompanies any offer typically must include:

  • A hardship letter detailing your financial situation and why you need the short sale
  • A copy of the purchase contract and listing agreement
  • Proof of your income and assets
  • Copies of your federal income tax returns for the past two years
Prepare Buyers for a Lengthy Waiting Period

Even if you’re well organized and have all the documents in place, be prepared for a long process. Waiting for your lender’s review of the short-sale package can take several weeks to months.

Some experts say:

  • If you have only one mortgage, the review can take about two months.
  • With a first and second mortgage with the same lender, the review can take about three months.
  • With two or more mortgages with different lenders, it can take four months or longer.

When the bank does respond, it can approve the Florida short sale, make a counteroffer, or deny the short sale. The last two actions can lengthen the process or put you back at square one. (Your real estate attorney and real estate professional, with your authorization, can work your lender’s loss mitigation department on your behalf to prepare the proper documentation and speed the process along.)

Don’t Expect a Short Sale to Solve your Financial Problems

Even if your lender does approve the short sale, it may not be the end of all your financial woes. Here are some things to keep in mind:

  • You may be asked by your lender to sign a promissory note agreeing to pay back the amount of your loan not paid off by the short sale. If your financial hardship is permanent and you can’t pay back the balance, talk with your real estate attorney about your options.
  • Any amount of your mortgage that is forgiven by your lender is typically considered income, and you may have to pay taxes on that amount. Under a temporary measure passed in 2007, the Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act, homeowners can exclude debt forgiveness on their federal tax returns from income for loans discharged in calendar years 2007 through 2013. Be sure to consult your real estate attorney and your accountant to see whether you qualify.
  • Having a portion of your debt forgiven may have an adverse effect on your credit score. However, a short sale will impact your credit score less than foreclosure and bankruptcy.
  • Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA

Article Source:  REALTOR® Magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS®.

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