What is a Short Sale?
Once the initial contact is made with the lender, and you have decided to attempt a short sale, an appraisal of the property’s value must be made. This will determine the current value of your home and an amount of equity, or lack of, to weigh against the balance of your loan. Unfortunately, depending where you live, the amount of foreclosures and short sales in your area can significantly drive down the value of your home. Sometimes the consequence is a large difference between the current value of your home and the amount you owe.
As hopeless as the current crisis is in the mortgage industry, regarding foreclosures, this can often be to the advantage of the home owner. With the amount of foreclosed properties already owned by your lending institution, and the costs associated with legal fees and maintaining the properties, often times it is in the lenders best interest to accept considerably less for the security. Regardless the task isn’t easy and the documents needed are lengthy and complicated to navigate.
Once you are through with finding a buyer and negotiating a short sale with your lender the process isn’t over. Now you have to think about the tax liabilities you are going to incur. The difference between the amount you owed the lender and the amount you actually negotiated is usually considered taxable income. However there may be some relief from the federal and local government depending on your situation, so be sure to consult a tax specialist to advise you on this matter.
Currently we are in an adjustment period, and short sales have become one of the tools at our disposal during the economic crisis we are presented with. Even though this road is hard the benefits far out weigh the alternative. A short sale may not be the perfect solution, but when you compare it to the long term issues foreclosure has to offer, I think a silver lining can clearly be seen.
Give us a call and let us help you through the process, we try to make it as easy a possible.
