Our office received a call from a homeowner who needed to relocate to another city due to a job transfer. The homeowner had lost his job in Phoenix and wanted to take the new out-of-state job, but he was unsure of whether to take the job… because if he did he’d have to sell his house, and the mortgage debt on his home was more than he could get in today’s Phoenix Real Estate market.
Basically, the home owner had three options. He could: (A) turn down the out-of-state job and continue to look for local employment; (B) walk away from the home and give it back to the bank in foreclosure; or (C) pursue a short sale of his home. In the end, the homeowner decided to pursue a short sale. Here is why:
- Credit Implications: One of the biggest reasons to pursue a short sale is to lessen the impact to your credit that occurs due to foreclosure. Missing a mortgage payment is one of the most damaging acts a consumer can do to their credit rating. Missed mortgage payments continue to damage your credit until the sale of the home is complete. Once a short sale or foreclosure is complete, you are no longer missing mortgage payments and continuing to damage credit. The trick to lessening the impact is to get the sale completed sooner! By pursuing a short sale, missed mortgage payments should be greatly reduced as opposed to waiting for the bank to complete a foreclosure.
- Legal Implications: In this situation, the seller had two loans on the home. If the homeowner let the home go in foreclosure, then the non-foreclosing lender would be able to pursue the homeowner directly for a deficiency judgment. By pursing a short sale, the homeowner is able to get protection from any future deficiency litigation.
- Tax Implications: Whether through a foreclosure or a completed short sale, a mortgage lender may write off the loss and send the homeowner an income tax bill for the amount of the loss. In our situation, the homeowner was able to plan in advance with tax specialists to help minimize the impact from this income tax bill.
- Avoid Foreclosure Implications: A foreclosure may stay on a homeowner’s credit record for 7-10 years and is sure to be a potential source of embarrassment. A foreclosure could also affect the ability to get future employment and security clearances. A foreclosure can also prevent the purchase of new Phoenix Homes for Sale for 3 years or more. For this homeowner, avoiding the negative stigmas of foreclosure was a very important reason for pursuing the short sale.
- Potential Relocation Payment: Through Home Affordable Foreclosure Alternatives (HAFA) and Federal Housing Administration (FHA) many homeowners are receiving relocations expenses of up to $3000, if they pursue non-foreclosure alternatives.
At The Thompson Group, we believe a well-planned short sale of Phoenix Arizona Homes should present significant advantages for homeowners who need to sell. (Always consult legal, credit and tax experts.) Do you wonder if you qualify? Contact any of our Phoenix AZ Realtors to find out at www.ThompsonGroupAz.com or 480-776-5215.
