Short Sales a Sellers Guide

In this video we will talk about short sales from a Reno and Sparks seller perspective.

A Reno short sale is simply when a Reno owner sells Reno Real Estate for less then the current mortgage. This is the reason all Reno short sales are subject to final approval from the seller’s lien holders.

Here is a direct comparison between Reno short sales and Reno foreclosure’s.

1st a deficiency judgment. A deficiency judgment is when the lien holder sues you for the amounts still owed on the balance of the lien after the bank foreclosures on the home. For example if you owed $300,000 on the Reno real estate and the bank sold it for 200K a foreclosure would leave the door wide open for the bank to sue you for 100,000 deficiency judgment. In a short sale we will get a letter in writing from your lien holders allowing you to sell the home for less then you owe. This will give you protection from a deficiency judgment.

2nd Credit implications. In a foreclosure your credit will be destroyed for 7 + years and the average credit hit is 300 to 400 points. In a Reno short sale your credit only goes down an average of 100 points and in as little as 2 years you will be in a position to buy a new piece of Reno Real Estate. Short sales itself hardly effects your credit; it is the late payments leading up to the sale that will.

So In a nut shell with a Reno short sale you could purchase a home again in as little as 2 years. With a Reno foreclosure you will have to wait on average of 10 years, not to mention everything else you will need your credit for over the next 10 years. Also for the rest of your live you will have to mark yes you have had a loan foreclosed on; on the standard 1003 mortgage loan application.

3rd lending Implications – with a Reno short sale once your credit has recovered there are no lingering implications. But with a Reno foreclosure or deed in lieu of foreclosure you will have to check the box on the home loan application that asks if you have ever been foreclosed on; on any piece of Reno real estate. This will follow you for life.

4th Tax implications – the tax implications are identical in a Reno short sale or a Reno foreclosure. Currently if the Reno real estate is your primary residence you will not owe a penny to the IRS. You are protected from what is called “phantom tax” by the mortgage debt relief act of 2007. If this is an investment property you still may not have to pay tax on the deficient amount if you can prove to the IRS you were insolvent at the time of transfer. In any case you need to speak with a Reno CPA about your own specific situation.

Really there is no downside to a Reno short sale if your other option is a Reno foreclosure. And especially since it is free to you. Your lender actually pays Kyle Krch’s commission and your Reno real estate closing costs.

Please if you have questions or want to set up a private meeting give Kyle Krch a call. Also go ahead and view our Reno short sale process video to see the steps to take, before we meet.