Las Vegas Short Sales Advice and Tips
Short Sales are very much a part of our Real Estate world here in Southern Nevada. They will be here for some time and are an important element in our economic recovery. We have given you some links to find out more information from our federal and state governments and some other important resources. We also have a list of “Frequently Asked Questions” below to help you with some of the more common concerns. Each deal is unique and your situation may not have any simple solutions, but just know that we are here to help you get the results you desire.
Short Sales Las Vegas FAQ’s
Please note that these answers compiled by the Brown Blankfeld Group of Berkshire Hathaway HomeServices, Nevada Properties and are shared at a time of great change in both market conditions and lender policies. This is not legal advice, we are not lawyers. While these answers have been provided to help our clients be better informed, each person’s circumstances are unique. We encourage anyone considering short sales Las Vegas to not only consult with us, but to consult their attorneys and their accountant.
All of the answers provided are based on our experience here in Southern Nevada. If you live elsewhere you may want to ask us to provide you with a referral to someone that may be considered an expert in your area.
- Home Again – Nevada Homeowner Relief Program
- Nevada Dept of Business Foreclosure Help
- Foreclosure Process
- Foreclosure Mediation
- HAMP/HAFA (Making Home Affordable)
- Alternatives to Foreclosure
- Home Foreclosure & Debt Cancellation
- The Mortgage Forgiveness Debt Relieft Act of 2007
- Financial Guidance Center
What is a short sale?
A Las Vegas short sale is a sale of a home that doesn’t produce enough money to pay off the lender, but the lender agrees to accept the sale at the discounted price.
How does the bank decide what price to put on the property?
The price of a short sale Las Vagas is eventually determined by what the bank is willing to accept and a buyer is willing to pay. The eventual sale price has nothing to do with the amount owed or the amount of the “short”. The bank will normally ask for an appraisal or a “BPO” (Broker Price Opinion) to help determine fair market value. Sometimes the bank will ask for several to be certain of the proper value.
What type of situation is the short sale best for?
While banks will consider a wide variety of circumstances under which they will grant a short sale, they generally ask the owner to demonstrate a “need” to sell not just a “desire” to sell. Issues such as a job transfer, divorce, and other major life altering events would normally be considered for a short sale Las Vegas. Issues such as “my neighbor paid half what I did” would normally not get much consideration from the lender.
Does a homeowner benefit from a short sale?
Under the right circumstances a short sale Las Vegas may very well be the best option for a homeowner, it may also not be a good option. Someone that needs to move for either financial reasons or a life altering issue will normally find a short sale in Las Vegas the most favorable option. The other choices would be to offer the houses for rent in Las Vegas or allow the bank to take the home in foreclosure. Owning a rental should be carefully evaluated for the long term financial affects and the overall cost of being a landlord. Foreclosure should be the last resort of any homeowner.
I'm an investor, can I short sale my rental property?
You can, but you need to consult your accountant to determine if the tax liabilities are worth the sale. The 1099 you will receive may create a large tax bill. You also need to know that simply allowing the home to go into foreclosure may not forgive the debt or the tax liabilities. You also need to consider the question of “Need” vs. “Desire.”
Does it matter what kind of loan I have?
Any lender will consider a short sale Las Vegas these days. FHA, VA, Fannie and Freddie all have programs in place to work with homeowners that need to do a short sale.
I am in foreclosure. Is a short sale for me?
You need to answer a few questions to determine if a short sale is right for you:
- Would you prefer to stay in the home given the opportunity?
- Do you have so much debt that you can’t pay back that makes bankruptcy a viable choice?
- Can you rent the home and not have to supplement the rent to pay the mortgage?
- If you answered yes to any of these questions, then short sale might not be right for you. You should consult your accountant or attorney to see which course of action is the proper one for you.
What options other than a short sale might I have?
Home owners that need to sell their homes while they owe more than they can sell it for are left with only a few options. Las Vegas Short Sale, Foreclosure or offer the home for rent. Offering the houses for rent in Las Vegas has to be carefully considered for the monthly cash flow and the long term prospect for profit. Foreclosure, in my opinion should always be a last resort. Sometimes it is the best answer, but normally a short sale Las Vegas is a more desirable outcome and will be easier to recover from.
What is "financial hardship" and why is it so important?
Lenders are asking everyone that wishes to “short sale” their home to provide what is known as a hardship letter. This letter is necessary to explain the need to sell the home. That “need” can be demonstrated in a variety of ways but it must be a genuine “need “and not just a “desire” to sell.
Who pays all the fees in a short sale?
While the lender holding the note will normally agree to pay for the normal fees associated with a short sale Las Vegas there are some expenses that lenders are asking the homeowner to take on. Those fees usually relate to the homeowners association, utilities, and sometimes broker and escrow administrative fees. These fees usually don’t add up to very much and are nowhere near the 7-9% the lender will be paying to sell the home. If you have other liens, (IRS, etc.) the lender may ask you to clear them. The lender normally pays the commission. However, this is determined on a case by case basis.
What do I do about my back property taxes when I do a short sale?
Property taxes should be current; if they aren’t then the lender will have to bring them current in order to sell the home. Sometimes the lender will agree and it won’t be a problem. Other times the lender will ask the homeowner to bring the taxes current.
Do you handle homes in my area?
We at the Brown Blankfeld Group handle the houses for sale in Las Vegas and other parts of Southern Nevada. We specialize in short sales in Las Vegas, Henderson and North Las Vegas, but we have done transactions as far north as Mesquite and as far west as Pahrump.
My home is really nice, why is the short sale offer price so low?
Unfortunately, the market these days isn’t providing prices that are appealing to sellers. That is especially true of short sales as they are more time consuming and require a great deal of patience from the buyer and the seller.
Are short sales guaranteed to work?
While the current success rate of short sale in Las Vegas is around 26%, it is way up from the 11% of a year ago. I would suggest the success of the short sale is up to the diligence of the seller and the listing agent. So, the better the listing, Las Vegas real estate agent, the better the chance for success in a short sale. We are currently experiencing an 82% success rate at the Brown Blankfeld Group and we are very proud to attain one of the highest success rates in Southern Nevada. If a short sale is un-successful the normal outcome is Foreclosure.
How long does a short sale take?
Unfortunately, short sales usually take a lot longer than normal sales. We at the Brown Blankfeld Group have successfully closed short sale in Las Vegas as little as 26 days and have had others take as long as 14 months. The average has been around 90-120 days.
Why do I have to sign a Borrower's Authorization?
In order for us to be able to negotiate with the lender on your behalf, we need you to authorize us to do so. Your lender will not speak to anyone about your loan unless you give written permission.
I have heard that I could owe income taxes after a short sale, is this true?
All debt that is forgiven (short sale or foreclosure) is considered income and is therefore subject to a 1099. You should consult with your accountant, but we can tell you that currently the IRS is excluding cancelled debt from your primary residence. That means no tax liability, with some exceptions. If you are short selling an investment you are not exempt and therefore should consult your accountant to determine the potential tax liability.
I am behind on my mortgage payments, but not yet in foreclosure. Can I do a short sale?
We at the Brown Blankfeld Group have successfully sold homes in Las Vegas where the homeowner was never late at all. We can certainly help anyone that can demonstrate a need to sell.
My house needs a lot of repair; can I still do a short sale?
While we encourage our sellers to continue to properly maintain their homes throughout the short sale process, we can sell a home that needs some improvements. The bank will be influenced negatively in accommodating a short sale if they feel that the seller is not fully cooperating.
I have 2 or 3 mortgages on my house. Can I still do a short sale?
Yes, but the second and third lenders will also have to agree to the terms of the sale. They will often require the seller to sign a promissory note and/or provide some funds at close of escrow to release their lien. We have been able to get the first lien holder to assist with the payment at close of escrow, but the seconds and thirds are still asking the homeowner to sign a note. In Nevada the second and third are considered sold off junior lien holders and have the right to recuperate their debt for up to six years. That’s on either a short sale or foreclosure. You may have to deal with your seconds and thirds for some time to come. We have been able to get some of them to agree to release the homeowner from any future liability but this has been rare lately.
When can I buy another house if I do a short sale?
The latest notes from Fannie and Freddie indicate that they will allow borrowers that sold a short sale the ability to purchase again in 2 years. These policies are constantly being updated and we at the Brown Blankfeld Group will be happy to let you know the latest information as it becomes available.
What happens to the difference between what I owe & what the house sells for when I do a short sale?
It depends, you could be sued for the difference, or the lender could forgive the difference and issue a 1099. The forgiveness of debt is considered income to you. The IRS however is making this income exempt from taxation if the home you sell is your primary residence, with exceptions. You should consult with your accountant to determine the potential tax liability in a short sale.
Will I have to pay any money/promissory note on a short sale?
The first mortgage will not normally require any promissory note, but it is possible. The second and or third mortgages however normally will require the homeowner to sign such a note. That requirement will be there for the homeowner with a short sale or a foreclosure.
How long will a short sale affect my credit?
If you are never late on your payments, the short sale itself should have only a minor effect on your FICO score. The late payments on the mortgage are the real FICO score killers. A short sale will be reflected as “Paid, but not as agreed”
Can I file Bankruptcy and do a short sale?
Bankruptcies and short sales in Las Vegas are usually not compatible. You should definitely consult with an attorney about the impact of bankruptcy and measure that against the option of selling your home.
Who pays for the HOA (CIC) balance if I do a short sale?
We ask our homeowners to maintain a current status with their HOA. That helps the bank to sell the home without any extravagant penalties or fees. We have found that the biggest killer to short sale in Las Vegas is the HOA trying to enforce exorbitant fees on the lender and the lender is often better off just foreclosing and having the HOA only get the back monthly assessments.
Should the buyer in a short sale put earnest money in escrow?
We have found that any escrow opened without earnest money, never closes. When we at the Brown Blankfeld Group represent a seller in a short sale transaction in Las Vegas, we insist that the buyer put earnest money in escrow. That buyer’s money can be refunded to them at any time if they decide they no longer want to buy the home as long as the lender has not provided written approval.
What is a deficiency judgment?
Nevada is a recourse state, meaning if you are foreclosed upon the Lender has the right to pursue what is known as a deficiency judgment. If less than the amount of debt is paid in short sale in Las Vegas, the Lender may also reserve their right to pursue the Owner for the remainder of the debt by civil suit. This topic should be discussed further with an attorney.
Contact us in-order to get suitable houses for rent in Las Vegas, Nevada. For further assistance please contact us at 702-315-7591, we are always here to assist your needs.