Short sales are a phenomenon of the late 2000’s that have taken the San Diego real estate market by storm. San Diego short sales present good opportunities for both buyers and sellers, but it is important, as in all real estate transactions, to be work with a well qualified agent in the short sale process.

For San Diego home owners who can no longer afford to keep their mortgage payments current, there are alternatives to foreclosure or bankruptcy. The most common option is called a “short sale.”  In 2010, the Obama Administration embraced short sales and put together legistlation that creates incentive to both the lien holder and the seller. 

Short Sale San Diego

Short sales have become so common in San Diego that it is estimated that MORE than one in four sales in 2010 will be a short sale. 

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What is a Short Sale?

When lien holders agree to do a short sale in real estate, it means the lender is accepting less than the mortgage amount owned on the property. Not all lien holders will agree to a short sale or reduced payoff. At times, the lien holder will not approve a short sale if it makes more sense financially to foreclose. In addition, not all sellers or all properties will qualify for a San Diego short sale. 

One key factor in a Short Sale is that the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the home owner. This negotiation is all done by our full time Short Sale Processor through communication with a bank’s loss mitigation department.   

We specialize in marketing properties and finding buyers for our San Diego Short Sale listings while our  in house Short Sale Processor specializes in negotiating with the lender.  We have a time proven system that works and have had over 10 years experience communicating with banks.  We understand short sale guidelines and work have successfully worked with lenders big and small to complete many short sale San Diego transactions.  We have outstanding relationships with the following banks:

Bank of America   |  Manhattan Chase  |  Wells Fargo |  Litton Loan Servicing  |  Indymac Bank  |  Lehman Brothers  |  Citibank  |  Provident Funding  |  Flagstar  |  and more…

San Diego Short Sales For Buyers

If you are taking into consideration buying a short sale, there is a good opportunity that you will be able to buy the property for 5-10% below market value. Like all real estate purchases, it is important to:

• Make sure the property has a clean chain of title
• Make sure the short sale approval does not allow a provision to attach a judgment against the seller to the subject property.

There are also drawbacks against buying short sale properties:

• Purchasing a short-sale can take anywhere from 2-6 months or even longer if the listing agent does not understand the complexities of a short sale.
• The seller may be delinquent on real estate taxes and HOA dues and the bank that grants short sale approval is unlikely to pick up the tab for these items.
• There is no guarantee the short sale you make an offer on will be approved by the lien holder.

Short Sales San Diego For Sellers

For a truly distressed home seller, a short sale can be like a dream come true. For a San Diego home owner that applies for a short-sale and is approved by the lien holder, there are some great benefits:

• The lien holder forgives the seller the sum of the difference between the amount of the mortgage owed and the sales price. For example, if a seller owes $650,000 on the original mortgage and the short-sale is approved at $400,000, then the seller would be forgiven the $250,000 difference.
• Short sale seller’s credit is only adversely affected for 24 months rather than 60 months with a foreclosure and San Diego Short Sale transactions will show up “AS AGREED” on your credit report.
• A short-sale is the “acceptable” way to lose your house and is not humiliating like a foreclosure. If the bank approves your short sale, then you have come to an agreement with the bank and have no reason to feel embarrassed.
• The CA state legislature approved a bill that would exclude homeowners who do a real estate short sale from having to pay taxes on the debt forgiveness, aligning state law with the federal Mortgage Tax Debt Forgiveness Act
• A Short Sale will have a much less negative impact on your credit than a foreclosure, so a Short Sale may be the best course of action for you if you’ve fallen behind on your mortgage payments. 
• In most cases, if you have a short sale on your credit report, you will be able to qualify for a home loan in as little as 2 years.  If you have a foreclosure on your credit, you are looking at 5-7 years to qualify for a mortgage.

Possible Downfalls to Short-selling your Home

• If you took a “cash out” refinance on your home, the loan may be a recourse loan meaning that the lien holder could come after your personal property to cover the money owed.
• Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, the I.R.S. could potentially consider debt forgiveness as income if you took cash out of your house and spent it on other items other than home improvement.

We Have Short Sale Experience

You need a San Diego Realtor with exceptional short sale experience and a staff that is capable of handling the high maintenance process.

We are here to help expedite your short-sale transaction and protect your best interests. You don’t want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner.

At Dannecker & Associates, we have a full-time short sale processor that communicates with the lien holder weekly and sends out a weekly update. For highly complicated transactions, we have a group of attorneys that we hire to process our short-sales at no extra cost to our clients.

We only get paid when we successfully negotiate the approval of your short sale, find a buyer, and see the transaction through to close. Let us go to work for you on alleving your financial stress today. Contact us to discuss your ability to qualify for short sale approval.

Short Sale Documentation

Although all lien holders’ requirements vary, they all require the home owner submit a wide array of documentation. The following items will give you a general idea of what you will have to provide for a successful short sale approval.

• Letter of Authorization
• Preliminary Net Sheet
• Hardship Letter
• Proof of Income and Assets
• Copies of Bank Statements
• Comparative Market Analysis
• Purchase Agreement & Listing Agreement
• Estimated HUD-1 Closing Statement

As real estate agents, we not licensed as attorneys or CPAs and cannot advise on the tax ramifications or legal implications of a short sale, but we can certainly connect you with a well qualified attorney who can.  We are happy to collaborate with any attorney to verify that your best interest is at hand. 

Give us a call to get started:  619-309-8011

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