“I am considering doing a Short Sale on my New York property, How do I do that?”
So you are considering doing a short sale on your property in New York, but you are not entirely sure how to go through the entire process right? First of all let’s explain what a short sale is:
A short sale occurs, when your mortgage lender accepts a lower amount as total payment for your loan. So for example: Let’s say you purchased your house at the peak of the market back in 2007 for $400,000 you put down a $50,000 deposit. Your principle balance would be $350,000. The housing market crashed and fast forward to 2018 your home is worth approximately $290,000. Your outstanding loan is approximately $310,000. So let’s assume you sell your house for $290,000. Once you factor in 6% realtor fees, closing costs etc, you would probably net around $270,000 leaving a gap of approximately $50,000 that you owe to your lender.
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Now, unless you can come to the closing table with $50,000 which is owed to the bank, then you may want to consider negotiating with the bank and trying to do a short sale. Assuming the bank accepts the short sale, they would consider the $270,000 you got from selling the house as entire payment for the outstanding loan. And you get to walk away from the property not owing anything.
Sounds great doesn’t it? But hang on a second, what are the downsides?
- Your credit score will be negatively affected. you can expect your credit score to drop 100 to 150 points.
- The bank may report any discrepancy to the IRS, who may consider this as income. So if your income was $100,000 last year, according to the IRS you’ve now made $150,000! You will be expected to pay taxes on that additional $50,000 forgiven by your lender. (Always consult a qualified NY tax professional who can advise you when doing short sale.)
- The short sale will stay on your credit report for up to 6 years making it almost impossible to get another mortgage until it is removed.
Somethings you definitely want to do if you are considering short sale in New York. Always consult a tax professional and always have an attorney handle the short sale. Do not have a realtor negotiate with the bank as most realtors do not know the legalities of having a short sale with the bank always work with a company that has a legal department and has relationships with multiple banks and know how to streamline the whole short sale process.
At Fair Offer NY we will offer you a free consultation with one of our legal professionals and they can advise you immediately if there is a good chance of you being accepted by your bank for a short sale.Give us a call or text us today on 347-685-9317 and talk to one of our agents and will be happy to offer you some advice.
We Buy Houses in: Queens, Brooklyn, Bronx, Manhattan, Staten Island, Westchester County, Rockland County, Putnam County, NY , Fairfield County CT and all neighboring areas. If you are a fed up landlord, just inherited a house, going through divorce, owe property taxes, in foreclosure, or just want to cash out then we are interested in buying your house and can close very quickly or whenever you are ready.
Legal disclaimer. Fair Offer NY is not a law firm. Please always consult a qualified legal professional when considering applying a short sale. Fair Offer New York is not a tax professional. Please always consult a qualified tax professional when considering doing a short sale on your property.