On paper, the idea of a “short sale” sounds like a way for beleaguered homeowners to get out from under a mortgage they can?t make payments on. But real estate and mortgage experts said that help isn?t easy to come by.
In a short sale, a homeowner behind on mortgage payments can seek a buyer and, once a contract is reached, ask his or her lender?s permission to sell the home for less than the mortgage value. The difference between the sale price and the mortgage is forgiven to prevent the home going into foreclosure.
But that process is extremely difficult, and there?s numerous ways a short sale can fall through, said David McIlvaine Sr., an agent with Keller Williams Realty in Ellicott City who specializes in foreclosures.
Homeowners first have to find an agent familiar with the uncommon short sale process. They have to find a buyer willing to take a home that has already seen its price decline. And if they can even get the bank?s attention, McIlvaine said it can take 45 to 60 days to get an answer ? too late for some to avoid foreclosure and a turnoff to buyers ready to move in quickly.
“More often than not the banks are so overwhelmed, they don?t get back in time,” he said. “You really need to have a relationship with someone at the bank to get some answers.”
McIlvaine handled three short sales in the last six months, and said one bank he deals with claimed to receive numerous calls daily asking about the process. But Bill Parisi, president of Baltimore-based 1st Preference Mortgage Corp., said his company hasn?t seen any short sales recently.
Parisi said a lender would only likely accept a short sale offer if the homeowner was in imminent danger of foreclosure. But that lender may take so long to decide whether to accept the offer that the home could go into foreclosure anyway.
“Are banks willing to do it? You?ll find one here and one there if you?re three or four months behind on the mortgage,” Parisi said. “If you?re still making payments, they?re not going to let you do it.”
Worse, under current tax law the federal government considers the difference between the mortgage value and sale price as a gift from the bank to the homeowner. Taxes on that “gift” can easily run into the thousands of dollars, said Michael Anikeeff, chairman of Johns Hopkins?School of Real Estate.
