What is a Short Sale? Am I going to close on the home fast since it is a short sale? What is short about it? These are just some of the questions I get asked again and again while viewing or listing different properties. 
Short sale is basically a term used when the home has a mortgage balance higher than what the house is worth. Usually in these cases the home owner has only few choices which includes coming to the closing table with the difference in amount, signing a promisorry note for the outstanding balance or do short sale in which the bank is the main decision maker. When your home is not worth what you owe and you have to sell, you need to squeeze every dollar possible from the sale. Here are some tips that will help navigate through the short sale process.
- Know who your banks are or who you owe the money: A short sal eha sto be approved by the bank who has the mortgage or lien on your property. This includes mortgage lenders, Home Owner’s Associations, Equity line lenders, Contractors.
- Pick your Real estate agent and short sale team: You will need a team of short sale experts so interview your agent to make sure they have experience in short sale process. You also need to have real estate attorney and accountant on your team.
- Get your paperwork ready: Paperwork like listing agreement, hardship letter explaining why you need to do a short sale, federal income tax returns, bank statements etc.
- Be patient: Despite you doing everything right, it may still take lenders weeks or months to decide whether to allow you to sell your home in a short sale. It may even take longer if you must negotiate with more than one lender and association etc.
- Know how it will affect your taxes: Consult with your accountant about the tax affects. Any unpaid amount could be considered a income to you under federal tax rules.
- Credit Score: Having a short sale may negatively affect your credit score, but a short sale typically damages your score less than a foreclosure or bankruptsy. Consult with your lawyer about the outstanding amount owed and if the lender states that they will forgive any losses, get it in writing.
If you follow these guidelines and be patient through out the short sale process, you will be able to get the most out of your home.
