Short Sales in Florida: A Comprehensive Guide
Definition
Key Facts
- Definition: A short sale occurs when a homeowner sells their property for less than the amount owed on the mortgage.
- Listing the Property: The property typically needs to be listed for sale before a short sale offer can be accepted.
- Financial Hardship: The homeowner must demonstrate evidence of financial hardship, such as loss of employment or income, divorce, or other circumstances.
- Lender Approval: The lender will review the short sale offer and may order an appraisal to ensure it is fair.
- Proceeds and Debt Settlement: Upon closing, the lender receives all the proceeds from the sale to settle the mortgage debt, minus any fees and commissions.
- Relocation Incentive: Some lenders may provide a relocation or other type of incentive to the homeowner, typically ranging from $1,500 to $10,000.
- Deficiency: The lender should sign a document stating that they will not pursue the difference between the mortgage debt and the sale proceeds from the homeowner, known as the “deficiency”.
- Benefits: Short sales allow distressed homeowners to avoid foreclosure, stop struggling with high mortgage payments, and potentially save their credit quicker than through foreclosure.
- Timeframe: While shorter than foreclosure, short sales can still take several months to complete due to the required documentation and lender approval process.
- Tax Consequences: Short sales may have tax consequences, so it is advisable to consult with an accountant before accepting a short sale offer.
A short sale is a real estate transaction in which a property is sold for less than the amount owed on the mortgage. This option is typically pursued by homeowners who are facing financial hardship and are unable to make their mortgage payments.
How Short Sales Work
Listing the Property
The property must be listed for sale and marketed to potential buyers.
Financial Hardship
The homeowner must provide evidence of financial hardship, such as loss of income, divorce, or other extenuating circumstances.
Lender Approval
The lender reviews the short sale offer and may order an appraisal to determine if the sale price is fair.
Proceeds and Debt Settlement
Upon closing, the lender receives all proceeds from the sale to settle the mortgage debt, minus any fees and commissions.
Relocation Incentive
Some lenders may offer relocation or other incentives to the homeowner, typically ranging from $1,500 to $10,000.
Deficiency
The lender typically signs a document stating that they will not pursue the difference between the mortgage debt and the sale proceeds from the homeowner, known as the “deficiency”.
Benefits of Short Sales
- Avoid foreclosure
- Stop struggling with high mortgage payments
- Potentially save credit quicker than through foreclosure
Considerations
- Short sales can take several months to complete due to the required documentation and lender approval process.
- Short sales may have tax consequences, so it is advisable to consult with an accountant before accepting an offer.
Sources
- Lang Realty: Short Sales & Foreclosures
- Marina Title: Pros and Cons of Short Sale in Florida
- Lang Realty: Distressed Properties
FAQs
What is a short sale?
A short sale is a real estate transaction in which a property is sold for less than the amount owed on the mortgage.
How do short sales work in Florida?
To initiate a short sale in Florida, the homeowner must list the property for sale, provide evidence of financial hardship to the lender, and obtain lender approval. Upon closing, the lender receives all proceeds from the sale to settle the mortgage debt, minus any fees and commissions.
What are the benefits of a short sale?
Short sales can help homeowners avoid foreclosure, stop struggling with high mortgage payments, and potentially save their credit quicker than through foreclosure.
What are the considerations for a short sale?
Short sales can take several months to complete and may have tax consequences. It is advisable to consult with an accountant before accepting a short sale offer.
What is the process for a short sale in Florida?
The process for a short sale in Florida typically involves listing the property, providing financial hardship documentation to the lender, obtaining lender approval, and closing the sale.
What are the requirements for a short sale in Florida?
To qualify for a short sale in Florida, the homeowner must demonstrate financial hardship and obtain lender approval.
What are the fees associated with a short sale in Florida?
Fees associated with a short sale in Florida may include real estate agent commissions, closing costs, and lender fees.
How long does a short sale take in Florida?
Short sales in Florida can take several months to complete due to the required documentation and lender approval process.