Know the Facts about Short Sales in Louisville Kentucky

Short Sale Questions and Answers

1) If you buy my house for less than what I owe, what happens to the remaining balance?

Your Mortgage Company puts in writing that you get to walk away from the difference.  Will you ever have to pay it back? NO, never! It’s over when you sign the short sale acceptance letter.

2) Why is my Mortgage Company willing to forgive so much of my debt?

Because if they don’t, they could lose even MORE money.  A single foreclosure costs the mortgage company an average of $60,000. By allowing you to sell it for less than what you owe, they’re saving money and time.  It’s in their best interest  to allow you to sell the house for less with a Short Sale and let you walk away from the difference, rather than let the house go to auction.

3) Do I Need to Find a Buyer?

No.  Unless you wish to sell the house to someone other than us, we will purchase the property from you.  If you would rather sell it to someone else, we can help facilitate a short sale at no cost to you (because we charge the mortgage company for our services)

4)  What does it cost to do a Short Sale?

There is NO COST to do a Short Sale. We cut back your costs in order to make it possible for as many families in Kentucky to avoid foreclosure as possible.  Kentucky Solutions only makes money when we successfully negotiate your short sale.  Even then, that expense is paid for by your Mortgage Company, NOT YOU! That is one reason we are very motivated to help your short sale succeed.  The primary reason being that we enjoy helping families live better and happier lives by serving them.

If you wish to maximize your chances of your Short Sale being successful, we highly recommend that you pay for a repair estimate, title report, and for an estimate to repair mold or structural damage (if any). The average cost for these optional estimates is $400.  Short sales will typically delay a foreclosure auction for 3 months or more, which means most people will actually SAVE an average of $1,800-$2,700 in rent payments making the optional repair estimate cost seem insignificant.

5) How long will it take?

Typical Short Sales take 1-3 months.  However, it’s not uncommon for them to take 3-6 months or more.  In some rare instances, it has been up to a year before the lender has said “yes” to the Short Sale.

6) My house is going to auction soon, do we have enough time?

Yes.  In most cases, if we contact your lender with a Short Sale offer, they will postpone the auction on your home.  If it is postponed, we usually will have an extra 1-3 months to continue with the Short Sale.  It is not uncommon to postpone an auction 2-3 times this way.

7) When do I have to move?

Those who do a short sale will normally have at least 30 days after approval to find a new place, in addition to the 1-3 months it takes to complete the short sale.  We will work around your particular circumstances to ensure you and your family are able to relocate safely and comfortably.

However, if you don’t call us for help before the house is sold at auction, you should move immediately.

8) I plan on declaring Bankruptcy, should I wait until the short sale is completed before doing so?

We prefer this.  However, you should always contact your Attorney for legal advice.  Note that bankruptcy will usually only postpone a foreclosure and will rarely stop it permanently.

9) Will there be Tax consequences to a Short Sale?

Extremely Unlikely.  “The Mortgage Debt Relief Act of 2007” was passed to enable people to walk away from paying any taxes incurred as a result of a Short Sale.  This means that most people pay $0 as a result of a short sale.  The lender will usually send out a 1099 for the amount of the forgiven debt.  However, your CPA can explain how to use 1099c to cancel out this debt.  If the house goes to auction instead of doing a Short Sale, the tax consequences are usually far greater.

As always, contact your CPA for any financial advice.  For more information on deficiency judgments and 1099’s please consult IRS Pub 523, Code form 982 section 121, The Mortgage Debt Forgiveness Act H.R. 3648 or ask your CPA.

10 ) What about back taxes, judgments against me, or my second mortgage? Will they be paid?

If the short sale is successful, all of those things will be paid or otherwise negotiated with ZERO money out of your pocket at closing.

11) How will this affect my credit?

A Short Sale will significantly reduce the affects of the foreclosure on your credit report over letting the house go to the auction.  Extensive research has been done concerning credit implications when a homeowner is in a default situation.  Those findings are listed below:


One month behind: 12-15 point reduction
Two months behind: Repeat reduction of above
Three months behind: Repeat reduction of above
…add these figures to below
Foreclosure with BK Extensive point reduction 7-9 year reporting
Foreclosure Auction 290-320 point reduction 5-7 year reporting
Deed-in-lieu 150-200 point reduction
Short Sale 70-90 point reduction
* These numbers are only a general guideline and sample picture of the realistic outcomes.  These numbers will vary depending on your credit score before default as well as other credit factors that apply to you individually.  We do not testify the accuracy of these numbers and reporting for each individual set of circumstances.

12) Will I have to make repairs to the property before you want to buy it?


Absolutely NOT.  The worse the condition it is in, the better.  We prefer houses that have mold, foundation problems, tenant damage, etc.  However, if the house is in excellent condition, that is fine as well.  Do not make any repairs to the property prior to us buying it, doing so will only hurt our chances of success.


13) What happens after you submit the paperwork to my lender?

a)     They will order an internal appraisal to determine what the property value is.

b)     We wait to find out what their response is.

c)     We negotiate the price with the lender

d)     The lender puts in writing that they will accept $XXX,000 and agree to waive the balance.

e)     We schedule a closing time with you and if you agree to all the terms set by the mortgage company, you sign the documents at closing.

f)     You move out and the foreclosure is stopped.

14)  Are all Short Sales Successful?

No.  Mortgage companies do not want your house but there are times that they believe falsely that the house is worth more than it really is.  If this is the case, they will reject almost any offer that is sent to them.  This happens frequently with all lenders.  Lenders frequently will not return phone calls, will lose the paperwork we send in repeatedly, and/or do not assign the case to someone before the auction on the home takes place.  There are many variables and they are all dependent on the Mortgage Company.

Fortunately, we have a 65% success rate compared to the national average of 25%-40%. Our extensive experience with short sales and our established relationships with big lenders all help ensure our success rates stay high.

15)  Will I have to sign over the deed to you? I was warned not to do so on a foreclosure scam website.

With loan modifications, you should NEVER sign over a deed.  On a short sale, ONLY WHEN WE CLOSE ON THE HOUSE after the short sale is approved, will you sign over the deed.  At that time, it will be in front of a reputable Attorney in Louisville who will guarantee it is not a scam.  In fact, transferring of ownership is insured for up to the value of the home in this case.  A deed transfer is required in order to SELL your house so there is no need to worry if that is what you want to do anyway.

16)  Where can I find a Realtor to help me with my Short Sale?

We can refer you to multiple excellent Realtors that specialize in Short Sales in the Louisville/Kentucky market.   They can help facilitate the sale of your home to ensure everything is done according to market standards.  Remember, when you want to sell your house via Short Sale and call Kentucky Solutions, you don’t have to wait for a buyer because we’ll buy it! We love helping people and this is one of the ways we do that best.

You can read about Louisville’s Best Short Sale Realtors Here on our Blog.  You can call us for a referral at 502-212-2482 or fill out the form linked in the blog post.

17) DO YOU HAVE A QUESTION NOT ANSWERED IN THIS F.A.Q? Ask your question below and we’ll add the answer!