Summerlin, Las Vegas Homes For Sale and Real Estate Agent Values
The Ballen Group of Keller Williams Las Vegas
Summerlin Home Specialists

Frequently Asked Short Sale Questions

What is a Short Sale?

A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property. In addition, the property owner cannot afford or chooses not to repay the liens full amounts.

Therefore, the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency.

Why would a Bank Say Yes?

With foreclosures on the rise in the US, banks are looking for any way they can to minimize their foreclosure losses. Basically, it is much more cost effective for a bank to agree to a short sale rather foreclose on a home.

Banks aren’t in the business of owning real estate and collecting monthly mortgage payments, so a bank will take a minor loss in a short sale to start that payment cycle again.

In addition, if the home is in foreclosure, a bank must pay for upkeep, insurance, and other costs.  Plus, through the foreclosure process, the bank would incur legal and court fees.

The truth of the matter is that a bank can minimize their loss by ten, twenty, even thirty percent in a short sale over foreclosure.

What About Taxes?

There may be tax ramifications to a Short Sale but every situation is unique. You may have heard, “Don’t do a short sale because you will get a 1099 and have to pay taxes on the difference between what you owed on your home and what you sold it for or the amount the bank wrote off.” This may be true, but this is not the whole story.

If you borrow money from a lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender.

When that obligation is subsequently forgiven, the amount you received as loan proceeds is normally reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

The thing that most people don’t know or don’t tell you is that with a Foreclosure, you will also get a 1099. In the case of a Foreclosure the 1099 is called a “1099-A”  and the ‘A’ stands for “Acquisition or Abandonment of Secured Property”. It is important to know that while there are many differences, the tax consequences for the ‘C’ and the ‘A’ are the same. Because of The Mortgage Debt Relief Act of 2007 you may not even be required to pay taxes on the ‘income’ as shown on the 1099-C. However, you shouldn’t just assume that you won’t have to pay. While we are very good at successfully closing Short Sales, we are not tax experts.

This question is asked very frequently and involves a number of unique variables. The first thing to keep in mind is that the moment you are 30+ days behind on your mortgage payment, your bank has the right to report to all of the credit bureaus that you are 30 days behind on your payments. When a late payment is reported to the three major credit bureaus, it does have a direct affect on your credit.

After going through a Short Sale or a Foreclosure, most people have multiple 30, 60, and 90+ day late payments reported on their credit report. When the actual Short Sale is completed, most banks will report to your credit report that your account was “paid in full for less than the full amount.” Your credit report may also be marked as “settled.” It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language used. If your home were to go to Foreclosure you would most likely see the bank report “Foreclosure” on your credit report. It is difficult to gauge how much damage will be done to your credit score when comparing a Short Sale to Foreclosure.

Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse.

We strongly advise you to work with a Credit and Credit Scoring Expert for more specifics on this topic, and ways in which to improve your credit after the Short Sale is complete. Recently, many of our clients were able to Short Sale their homes without ever missing a payment. Therefore, they do not have any late payments reported to their credit. When there are no late payments on your mortgage, your credit score is generally not affected. It is possible to maintain a high credit score by completing a Short Sale without missing payments on your mortgage and other bills. Please be aware though, that your lender will still report that a Short Sale was done. So, while you may not see your credit score drop if you continue to make payments through the completion of the Short Sale, you’ll still likely have your account marked as “paid in full for less than the full amount” and/or “settled.”

STOP NOW and Call 702-482-7739 to get help with your Las Vegas Short Sale. Or use our quick and Easy form to request a complimentary consultaiton about your Short Sale. 


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Selling a home via a short sale in Las Vegas can be an arduous task.
Call 702.482.7739 at any time to speak with a Las Vegas Short Sale Specialist

There are many different reasons that you may need to sell your home. Perhaps you have gotten a new job, marital issues, been faced with being downsized in the workforce, or you simply don't want to live there any longer. However, you have one problem. You currently owe more money on the home than it is valued at. This means you aren't going to be able to sell the home for a profit. At best, you will take a minimal loss so that you aren't carrying heavy debt into your future. To be sure, you don't want to risk going into foreclosure and ruining your credit rating. You need to be proactive and find an experienced real estate agent in Las Vegas who can help you navigate the short sale process.

A short sale is when you owe more money on something than it is worth. You will ask the lender of your loan if they will accept a lower amount of money to satisfy the debt so that you can avoid foreclosure. For example, you may owe $140,000 on your Las Vegas home, but it's only worth $100,000. You won't be able to sell it for the $140,000. So, you contact your lending institution and ask them if they will accept $120,000 so that you can sell the home. If the mortgage company agrees, you will be able to sell the home. In the state of Nevada, there are very specific laws regarding the unpaid balance of the loan, referred to as a deficiency. The lender cannot seek compensation for a deficiency if the lender is a financial or banking institution, if the home is a single family dwelling that the borrower owns at the time of the short sale, and the borrowers have consistently lived in the Las Vegas home continuously. There must also be a waiver and it is extremely important that one is signed at the time of the initial purchase so that the borrower may use a short sale as an alternative to foreclosure. 

Selling your Las Vegas home as a short sale will require the services of a professional. You will want to choose someone with an excellent track record of being able to successfully sell homes with a short sale. It's preferable to enlist the services of a local real estate agent for this task. You want to know that your agent has personal knowledge of the area and that he or she has a good relationship with local lenders. Being able to sell the home as a Las Vegas short sale is a very long and involved process that can take a very lengthy amount of time. Most mortgage companies dislike approving a short sale and will try to avoid it if possible. You need to insure you have a Las Vegas real estate agent that has the time to do the follow up work involved in a short sale. The bank will drag their feet as long as possible. Your representative will need to make phone calls on a regular basis to see if there is any update on the lender's decision. Potential buyers for the home may get discouraged and withdraw their offer if the process takes too long. 

Getting the lender to agree to a short sale in Las Vegas is not as simple as visiting the bank and asking them if they will take a lower amount of money. You will need to prepare a significant amount of paperwork that you must submit to the bank when you request permission for a short sale. Some of the documentation includes:

  • Two years of W-2 forms
  • Letter of seller's hardship
  • Recent payroll stubs, if available
  • Recent bank statements
  • Completed financial statement

The lender will accept all of the information that you provide and make a determination on whether or not a short sale is the best option for your property. Many lenders do not want the home to go into foreclosure because banks are not in the property business. They face the possibility that the home stays unsold and empty for a long period of time. This means that there is no one to do general upkeep and maintain the property, which will lower the value. Also, there is always a risk that an unauthorized person will enter the property and do damage. This is also bad for the property value and banks want to avoid it at all costs.

Las Vegas, Nevada has gone through a rough period of time where many homes have been foreclosed on and short sales on distressed properties have risen. This has made lenders more likely to accept a short sale as opposed to denying the request and simply foreclosing on the property. Though it's up to each individual bank or financial institution, it's in their best interests to resolve the situation in a manner that suits both parties. 

You may be able to seek some relief from the government programs if you are trying to sell your home as a short sale to avoid foreclosure. This is provided that the home in Las Vegas was your home and that you were actively living in it. The professional that you hire will be able to guide you through this process also. They are there to represent your best interests and will help navigate through the rules, regulations, and paperwork. Selling a home in the best of circumstances can be a stressful situation. Selling a home as a short sale is a guaranteed way to experience high levels of stress. Let your professional handle the difficult aspects of the process.

Las Vegas, Nevada is a beautiful place to live. There are many homes that are available as a foreclosure or a short sale. It's imperative that you find the right person to represent you and guide you through the process so that you get the best result possible. When buying a property in Las Vegas, go with a local lender.


What to Expect During a Short Sale

Las Vegas Short Sale Process


  1. The Listing Contract – We will obtain all required forms and data to begin the process

  2. Lock Box – We will hang an electronic lock box for showings – if permitted. The lockbox is a computer and provides data to us for following up with agents who show the property. We find a lockbox doubles the showings than a property without one.

  3. Pictures – We will take pictures of the property in order to create a virtual tour and showcase the property on television, in print, and online. The better the pictures, the better your chances of selling your home and receiving offers the bank will consider.

  4. MLS – Within seven days of obtaining your listing, we will have your property live on the MLS. If we are unable to get pictures during that time, due to property preparation, we will have to do a written exclusion of the MLS. We encourage you to prepare your home in advance and work with the photographer on scheduling. If you allow a lock box, you will not need to be present for the photos. A professional style ad will be written, 8-12 pictures will be featured, and link to a virtual tour will be provided. The better the MLS brochures look, the more likely it is that we will receive an offer within our 6 week plan.

  5. The Shortsale Package Submission – All banks are different. Certain banks want the entire shortsale package up front, while others won’t look at anything until there is an offer. The shortsale transaction coordinator will submit all information including the authorization to speak on your behalf, the listing contract, and the package when the bank will allow the submission.

  6. The marketing plan-All shortsale listings are put on a plan from the day their listing is live on the MLS. This plan includes the weekly updates, internet marketing, and price reductions. This plan is designed to generate an offer within 6 weeks of a live listing. You will receive change orders that require your signature in order to reduce the price.

  7. The Timeline – The entire process typically takes 90-120 days

  8. The Offer- The law requires us that we present you with all reasonable offers. We will explain the offers, what they entail, and what they mean to you. You will have the right to accept, counter, or reject all offers. Our goal is to obtain an offer that proves to the bank that it will be more expensive for them to foreclose than to accept the loss on the provided offer. If the offer is too low, we will need to counter or reject. In some cases, especially where there is a tenant, the price has to be dropped under fair market value to encourage an offer. In this case, we will have to provide proof to the bank that we attempted to obtain a higher offer. This is done providing marketing proof, MLS records, and showing reports.


  9. The Acceptance – Once we have an accepted offer, all information will be submitted to the bank. The bank will require proof of the offer, all counter offers, and a HUD. The HUD basically provides the bank with a bottom line loss when they include the brokerage fees and closing costs.


  10. The Property Status – Here is the tricky part. Once you accept an offer, the board of Realtors REQUIRES us to list your property as “contingent” in the MLS. This shows other Realtors that your property has an offer. If a buyer hires a Realtor to look up active properties, your property may not show up on their report. This is required to prevent sellers from wasting the time of buyers who would otherwise assume your property is available. We are permitted to continue marketing your property as we had been on TV, Radio, Internet, Print etc. It is only the Multiple Listing Service that requires us to list your property as contingent. During this time we are permitted to receive other offers and send them to the bank as well. 


  11. The Escrow – We will require the buyer to open escrow within 24 hours of your signed acceptance. Although they will be required to deposit an earnest money deposit, this does not mean you are entitled to it. The earnest money check is cashed and held in a bank account assigned to the title company. In most cases, the offer provides the buyer with financing contingencies that entitle them to a refund if they lose their financing. In addition, they will have a due diligence process (explained on the next item) that allows them an exit strategy due to inspections etc. That being said, both parties to have to sign a cancellation of escrow in order for the buyer to obtain a refund. You have legal rights as well and will have the right to refuse the reimbursement with your legal representation. The Escrow officer will be determined in the contract. Nothing will be done without both parties agreeing, that includes the actual closing of the home.

  12. Due Diligence – Due diligence is the process where the buyer investigates everything they need to know, in order to make an educated a decision about the condition and whereabouts of the property. This includes inspections, investigations of nearby schools, worship, and other buildings or services pertinent to the buyer, home owner’s association’s amenities and regulations, and property inspections. The length of due diligence is determined in the contract and is typically 10-15 days. The buyer has the right to withdraw their offer and obtain a refund of earnest money within that due diligence process. After the due diligence process is complete, only finance contingencies, or the sellers failure to perform (honor the contract) would entitle them to a refund, unless otherwise agreed upon in the contract. In a “normal” transaction, due diligence would begin on the date the contract is signed. In a shortsale transaction, due diligence (unless otherwise stated in the contract) begins upon written bank approval of the short sale financing contingency. In other words, approval of the shortsale.

  13. The Bank Process – Once the bank receives the offer and the shortsale package, they begin their procedure. They will order what they call “Values”. The values are usually obtained by two reports. The first is a standard appraisal. The appraiser will valuate your property based on the condition and nearby sales. The second is a Brokers Price Opinion, more commonly know as a BPO. The BPO is ordered from a non-affiliated real estate agent.  In most cases, especially if your property is occupied, they will only do a “drive by” obtaining exterior pictures and statistics for the bank. The bank will then assign these values to a negotiator. The negotiator will then determine if the offer is acceptable. If you have multiple mortgages, this process has to be completed with each bank.

  14. The Decision – Most of our short sales are being approved, but new rules and regulations are put into play everyday. The most common reason for denial is liens. If you have not paid your HOA dues, you will be unable to pass a free and clear title if they have placed a lien on the property. We strongly encourage you to keep your HOA dues current. If there is a mechanics lien (sometime seen from a pool builder or repair person who was not paid), It makes it difficult, but not impossible to close. The bank would have to agree to pay off this lien. If the offer obtained is high enough, and the bank is ultimately receiving their “bottom line”, it might be paid. Another recent struggle is the 2nd or 3rd mortgage. In the past, the additional mortgages would take $1,000 and right it off. Today, they are getting tougher. We must get the additional mortgages to agree just as much as the first. Without their approval, we have no sale. Some banks have a standard (we won’t take less than ___dollars or ____percent of the sales price) and some are more flexible. We won’t know until we get into the details of your short sale. Once the bank(s) approve, they will give us a written approval stating their terms (bottom sales amounts, commissions, closing costs, timeline to close etc.) You still have to agree to sell. If you don’t agree with their terms, you don’t have to agree to the short sale either. If there is a denial, you owe nothing to the brokerage. 

  15. The Commissions – This is the good news. You do not pay the brokerage/agents commission, the bank does. The goal here is for the loss of your home to be your entire expense. Although we have a transaction fee, we ask the bank to pay that as well. The only thing you may have to pay is liens or HOA arrears if they can’t be negotiated.

  16.  The Closing – This is the best part. Once the acceptance from the bank is handed down, the HOA (home owner’s documents) package is approved, and the due diligence is completed, the buyers & sellers are brought into the Title Company to sign off on all documents. The buyer’s funds are then deposited (usually within 24 hours – 72 hours of signing), the deed is recorded, and you are done. You must vacate the property PRIOR to closing. In our experience, it is best to vacate the property 72 hours prior to closing (provided both parties have signed). This allows the buyer to complete the walk through on a vacant property. This is not required, just suggested. We suggest you have all utilities scheduled for shut off on the next MONDAY after closing. This way, if there is an extension for any reason, you are not stuck in the property with no power, gas or water. Please remember to forward your mail to your new address.


  17. The End – Hopefully a smooth process and you are now free to begin the next chapter of your life! 

    Call 702-482-7739 to be assigned to your Las Vegas Short Sale Specialist (North Las Vegas or Henderson) today.




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Keller Williams Realty Las Vegas is not associated with the government, and our service is not approved by the government or your lender. Even if you accept our offer of help with mortgage assistance and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

Lori Ballen

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