New York-Manhattan Short Sale Facts
Manhattan New York Real Estate market has adjusted in the past few months, we currently are helping several sellers completing short sales and avoid foreclosure by marketing their properties. We are receiving phone calls from sellers that may be in financial trouble and wanting to do short sales. But most of the sellers and agents who call on our short sale listings have little to no idea of the concept of short sales. Perhaps they will find this blog helpful.
What is a New York-Manhattan Short Sale and everywhere else?
A short sale happens when the lender is shorted on a mortgage, meaning the lender accepts less than the total amount that is due. If your mortgage is $800,000, but your home is worth, say, $600,000, you are $200,000 short, not including costs to close the sale such as real estate commissions, recording fees or title and escrow charges. Sometimes, to avoid going through the costs of foreclosure, a lender will sanction a short sale by letting a buyer purchase the home for less than the mortgage balance while the home is in pre-foreclosure stage. A pre-foreclosure stage is one of the three stages of foreclosures.
New York-Manhattan Short Sale Qualification
To determine whether you may qualify for a short sale. If you cannot answer yes to these requirements, you may not qualify for a short sale.
1. The Property Market Value Has Adjusted significantly comparable sales must substantiate that the property is worth less than the unpaid balance due the lender. This unpaid balance may include a prepayment penalty.
2. The Mortgage is in or Near Default Status It used to be that lenders would not consider a short sale if the payments were current, but that is no longer the case. Realizing that other factors contribute to a potential default, many lenders are eager to head off future problems at the pass.
3. The Seller has Fallen on Hard Times The seller must submit a letter of hardship that explains why the seller can not pay the difference due upon sale, including why the seller has or will stop making the monthly payments.
New York-Manhattan Short Sale Examples of hardship are:
- Unemployment
- Divorce
- Medical emergency / sudden illness
- Bankruptcy
- Death
Short Sale Consequences
A short sale is dependent on a buyer making an offer to purchase. If you do not receive an offer, you will not qualify for a short sale. So even if you meet all the other criteria, it is possible that no one will buy the short sale. It is also dependent on the lender accepting the buyer's offer. If the lender rejects the offer, a short sale will not take place.
Tax Consequences
If the lender agrees to the short sale, the lender may possess the right to issue you a 1099 for the shorted difference, due to a provision in the IRS code about debt forgiveness. Many situations are exempt from debt forgiveness, according to the Mortgage Forgiveness Debt Relief Act of 2007.
Blemished Credit Report
A short sale will show up on your credit report. It's a pre-foreclosure that has been redeemed. Short sales affect credit ratings. While the damage to your credit report may not seem as significantly bad as a foreclosure to you, creditors may not make the distinction. Experts say the drop in your FICO score is identical to a foreclosure reporting.
You should speak to a tax accountant to determine the amount of short sale tax consequences, and whether you can afford to pay those taxes, if any.
TO READ MORE OF OUR SHORT SALE FACTS and Available Manhattan-New York Condo listings:
- New York-Manhattan Short Sale Part 1
- New York-Manhattan Short Sale Part 2
- New York-Manhattan Short Sale Part 3
- New York-Manhattan Condo Listings
Having New York-Manhattan Short Sale is complicated, SELLERS or BUYERS please read our series in order to better understand what a short sale is and how we will proceed on with the short sale. If you are thinking about doing a short sale in Manhattan New York city market, call Eileen Hsu or Morgan Evans at (212)321-7122 or (917)837-8869 for additional details and your confidential short sale intake evaluation.
* Copyright © 2009 by Eileen Hsu: *New York-Manhattan Short Sale Facts*
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Eileen Hsu 許雅嵐 (email: EHSU(@)elliman.com)
We specialize in Manhattan New York Condominiums, townhouses, condops and cooperatives. We are condominium residents ourselves so we understand the Manhattan New York condominium community. We also enjoy all Manhattan neighborhoods, especially Upper West Side, Lincoln Square, Midtown East, Murray Hill, Financial District, Chelsea, Fifth Avenue, Greenwich Village, Nolita and etc just to name a few. If you or you know someone that may be interested in selling, buying or leasing their Manhattan New York condo, call us today (917)837-8869 or (646)644-6929 and we can discuss your specific Real Estate needs in private. Thank you.
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This is one of the best Short Sale summaries I've seen in a while Eileen ! Well done !
Hope all is well :o)
Cheers !
Sheldon
Eileen, great overview of the process on short sales in your area. Great information for this big category of inventory nowadays.