Short Sales

A short sale occurs when a lender or lenders agree to accept less than what is owed on a loan to allow you to sell your home instead of a foreclosure. This includes the first loan, second loan home equity etc. You don’t have to have all of these loans to have a short sale occur. You may have just one or two. You may have more. The point is all the lien holders must agree to the short sale for it to occur. It has been done before and will be done again. Why? Because this can be a win-win for you and the lenders. If they have to foreclose they may wind up owning a home. Junior lien holders, the seconds, home equity loans etc may get nothing at a foreclosure sale. Lenders like to lend money. Not own properties. Just because the lender allows a short sale to occur does not mean that you don’t owe them money. You may owe them the rest of the money, the balance. The lender or lenders may agree to give you forgiveness on the debt (you don’t owe them the balance). If the property you sell is your primary residence Congress passed a bill that the President signed in December that allows you not to declare the forgiveness given by the lenders as a gain and not have to pay taxes on it. Remember that is on your primary residence. If it was an investment then you may owe the IRS taxes. Talk to your CPA or accountant. The process for a short sale can take some time and the lenders require lots of information. Finding someone who can help you through this is a good thing. Realtors are a great place to start. Find an office that does this and start getting ready. Remember, you are not the first person to go through this and you are not alone. In good times and in bad times these things occur for many of the same reasons. Loss of a job, a death in the family, a divorce can all contribute to reasons why you are headed to foreclosure. Finding someone who can help with good advice is a great way to start. Not every realtor likes to do a short sale. Remember find a office that does short sales.

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