Information on Short Sale
THINKING ABOUT WALKING AWAY FROM YOUR HOME?
There may be another way…Your bank may consider a short sale, which is better for you and your credit. Here are the facts:
What is a “short sale” real estate transaction?
In real estate, a short sale is a sale that happens when the outstanding loan against a property is greater than the market value of the property itself. A short sale represents a solution for a homeowner who cannot pay his mortgage and wants to walk away from the property without blemishing his credit and financial profile through a foreclosure or bankruptcy declaration.
In some cases, the bank or lender will accept the sale price of the property even though it doesn’t fully cover the mortgage balance due. The price falls short of what is owed; thus the term “short sale.” Even though the lender does not receive the full amount due, such an agreement usually nets more than the lender would receive through an expensive foreclosure procedure. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose.
Such a transaction obviously benefits the owner; however there are drawbacks, such as tax liability. The amount forgiven by the lender can be regarded as income by the Internal Revenue Service. That might result in a significant increase in the amount owed in income taxes.
What is the market value of my property?
The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale. Such conditions include the assumption that the buyer and seller acted prudently and knowledgeably and that the price is not affected by undue stimulus.
How can I find out more about what is involved in a “short sale?”
As licensed real estate agents we cannot give you legal or financial advice, however, give us a call and we will give you the facts about what steps you will need to take. If you qualify, we can help you arrange a free consultation with a lawyer so you can confidently proceed. For more information about this process, please fill out the form below and be sure to mention in the comments that you are looking for more information on a Short Sale.
