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What is a Short Sale Anyway?

An increase in foreclosure rates will inevitably bring with it an increase in short sales. But what is a short sale?

A short sale happens when you sell your house for less than your remaining mortgage balance, the proceeds of which go to the lender and in return the lender forgives the remaining balance. Selling your home as a short sale is one way to avoid foreclosure.

As a general rule, lenders lose money when they foreclose on a property. Consequently, they would rather not have to foreclose if it can be avoided. A short sale represents an opportunity to cut their losses because a short sale usually allows them to recoup more of the cost of the loan than a foreclosure process would.

However, don’t think that a short sale is an easy thing to accomplish. In order to get permission for a short sale, you must provide documentation showing a genuine financial hardship. And don’t think that the decision for accepting a short sale is solely in the hands of the lender. Sure the lender must first agree, but this is not the final word. If there is mortgage insurance involved, this company also gets input on the decision. If there is an investor backing the mortgage, they also get input as to whether to accept a short sale.

The transaction process for a short sale can be rather cumbersome as well, whether you’re on the buying or selling side. Many short sales fail due to additional demands by the lender, such as requiring the broker to reduce his or her commission and/or that the seller signs a document requiring him or her to pay back the shortfall.

If you’re on the selling side of a short sale, consider having your agent or other experienced professional negotiate with your lender for a better deal. And remember, if the lender does accept a short sale and forgives part of your debt, that is considered taxable income and you must declare it as such to the IRS.

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Nick Duzich
Hirschi Realtors
3631 Maplewood Ave., Ste. 1
Wichita Falls, TX 76308
Cell: 940-224-1224
Fax: 940-691-1213
Email:
NDuzich@HirschiRealtors.com
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We had such a great experience with Nick Duzich! We were very picky about finding the perfect house and he went above and beyond to make sure we found "The One" Thank you Nick for all your hard work. David & Lindsey Cadaoas, Wichita Falls, TX
Nick was most instrumental in selling my house. For every possible roadblock he was very resourcefull in helping me find a low cost and efficient way to overcome the difficulties. I would recommend Nick as an excellent agent to anyone wanting high quality services. I am greatful for all he did in selling my house Nancy Terry
Nick Duzich was very aggressive when it came to selling our house. We were in the process of being transferred to Corpus Christi and our family was split up. He knew this was a difficult time for us. Nick went above and beyond to make sure to market the house. We had lots of showings and he made sure it was advertised everywhere. It was non stop interest. We had to be on our toes with all the requests and showings. Nick did an amazing job and we were in contract within 3 weeks. Nick was always there for us and went above and beyond to help in any way he could. He is very professional and trustworthy. Nick treated our house with respect. He was very helpful and very easy to communicate with. Talking to him is like talking to a friend. You feel like you have known him for years. I would recommend Nick to anyone who is looking for a realtor who will come into your home and sit down with you and listen. He is definitely there for his clients and he will treat you like family. This was the easiest transition in all my house buying years.  The Wallanders, Wichita Falls, Texas
Nick was very intuitive to our needs. He made sure since we were moving from 6 hours away to get us in a neighborhood that would best fit with our needs. Nick is so easy to communicate with. His way of being friendly helped us communicate better with him. We would recommend him to anyone shopping for a home! Melissa Colclasure
We loved our experience with Nick and Hirschi. We love our new home and wouldn't have been able to go through everything as smoothly as we did with out him. He was friendly and easy to deal with. He is very personal and paid attention to the details we required in searching for our new home. He is a people person and cuts to the point, we trusted his opinion about how to handle the purchase. Thanks Nick! Brandi H.
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