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10 Frequently Asked Questions About a Short Sale in Illinois
1. Q: The benefits of a Short Sale in Illinois?
A: You can sell the house and walk away. Credit report typically indicates "settled debt." The foreclosure gets dismissed. No bankruptcy needed because the home is negotiated and settled. Some banks may wish to reserve their right to pursue the deficiency or ask for an unsecured note to take some or maybe all of the deficiency…we will fight for a full release and let you know which route the bank has decided to go.
2. Q: Will I owe the bank any money?
A: The bank releases the note and sometimes writes off the deficiency…they may ask for an unsecured promissory note which can be included in a bankruptcy if needed or they could involve a collection agency.
3. Q: Will I owe any income taxes on the deficiency?
A: No, on December 20, 2007, President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007 ensuring that any deficiency written off as part of a short sale will not be taxed as long as it is the primary residence. The advice of a CPA is needed.
4. Q: What about my closing cost? Will I need to bring money to the closing?
A: No. You will not need to bring any money for the law office services. All of your closing cost, the real estate commission, any back taxes owed, attorney fees, title company charges, etc., will be allowed by the lender and subtracted from the sales price and paid by the lender at closing…if it does not close all of our fees are waived.
5. Q: What if I sign a contract to sell my house and the bank doesn’t approve the sale? Will the buyer be mad?
A: The Buyer will understand that this is a Short Sale in Illinoia and that your obligations are contingent upon your bank’s approval. It is the real estate agent’s job to price property to sell and then meet the banks appraiser at the property.
6. Q: I owe $600,000 to the bank but the house will probably only sell for $300,000. Will the bank accept such a huge loss?
A: It typically has nothing to do with the loan payoff. It is about the value of the real estate which is based upon a bank appraisal of the property.
7. Q: I have a second mortgage on this house for $50,000. How is this going to be handled?
A: The property is in foreclosure. The second mortgage holder knows that the first mortgage is in foreclosure because they were served summons and complaint. Therefore, the second mortgage holder will release their lien, but they will need to be paid something. Therefore, when an offer comes in, the Buyers agents will be called and notified that the Buyer may need to bring money to closing to release the second mortgage. This will be addressed in a contract addendum.
8. Q: I owe the IRS money and I think they put a lien on my real estate. How is this handled?
A: Law Offices may be able to get these released without paying the IRS any money or very little money. A Title Company will do a preliminary title search on the property to determine what is present and what needs to be dealt with prior to the Contract for Purchase and Sale, or what needs to be dealt with during the contract phase.
9. Q: Does my lawyer represent me or the bank?
A: The lawyer for the Seller represents the Seller. We welcomes your questions. Feel free to contact a Pro-Team Short Sale Specialist at 708-398-6400.
10. Q: I am not going to sell this house for under $300,000.
A: The REALTOR® should obtain authority to reduce the price each week in order to sell the property quickly. No matter what the property sells for, the Seller will not be receiving any of the proceeds.
Courtesy of: The Law Office of Christine Garner, PC
