Learn About Short Sales | Real Estate Investing

If you want to know if a short sale can save your house, read this article.

If you are wondering how short sales work and if a short sale could be right for you read the following article. ?It goes over the short sale process and information. Check out the details below.

If you are struggling to find a buyer for your home who will pay you enough to cover your mortgage payoff, you are not alone and there may be a solution for you. A short sale can be very useful in these types of situations and they are becoming increasingly common as the real estate market has been taking a bit of a ?beating? as of late. A short sale is when you sell your home and the lender agrees to accept a balance that is less than the full amount that you owe them.

Now why would the lender agree to accept less than the full amount that is due to them? This is a very good question. First off a short sale benefits the lender by getting the property off of their books and saving themselves from the possibility of having to foreclose on the property. If the lender has to foreclose on the property, the amount of time and money they will need to put into the process will be quite considerable. Therefore, by agreeing to allow you to sell your home for less and take what the market will give you, helps you out and helps the lender out.

If you are in this situation then working with a real estate agent who is familiar with short sales will come in quite handy. A real estate agent who is knowledgeable and experienced in short sales can really make this process go much smoother and can give you a better chance at getting your short sale request with the lender approved.

Once you have a bona fide offer made on your home that is not enough to cover the cost of the mortgage, you need to contact your lender and request a short sale. You will need to send in your request to the lender with all of the details of the sale along with your request for the short sale itself. Once the lender receives your request they will review it and all applicable documents and information and make a decision as to whether they will accept your short sale request or not. An experienced Realtor can give you assistance with this request to give you the best chance for it to be approved.

Once your request for a short sale has been approved and the home is sold, you are relived of any further obligations to this home and mortgage. The lender will release you from any remaining balance and you will be done. However, there has to be a drawback to this, right? You can?t just get out of this ?scott-free? can you?

Yes, there is one drawback. Normally, the mortgage lender will provide you with a 1099c, a cancellation of debt form, in the amount of the shortage of money that they received from the short sale. This does not mean you have to pay any money back, but what it does mean is that you will have to report this on your taxes for the appropriate tax year and this amount will be treated as ?normal income? and you will have to pay taxes on it as though you had earned the money during that year. A small price to pay to be able to get away from your home mortgage debt without a foreclosure affecting your credit.

Therefore, if you have any thoughts that you may have a hard time selling your home for what you owe on the home, you may want to ask around to some various Realtors if they have had any experience dealing and assisting with short sales before you decide on which one to sign a contract with. This may help out in the long run, if necessary.

David Zwierecki

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