A short sale in real estate occurs when the outstanding obligations (loans) against a property are greater than what the property can be sold for. Short sales are a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling with lender.
This is the fastest-growing foreclosure alternative. Many lenders will allow a Short Sale, when the home sells for less than the amount of the loan. This is attractive for lenders because they lose less money than in a foreclosure. Also, Short Sales generally take less time than foreclosures, so the banks don’t have to carry the properties on their books as liabilities.
And it’s attractive for homeowners because the impact on their credit is far less than in a foreclosure. You may be able to buy another home in as little as two to three years after a Short Sale, compared with a typical seven-year wait after a foreclosure.
Short Sales are paperwork-intensive, and there are many, many details involved. If you’re considering this option, it’s critical to work with a trained real estate agent who knows all the steps required to successfully complete a Short Sale. I can help guide you through the process and act as a liaison between all the parties involved.
The U.S. Treasury announced guidelines for streamlining and simplifying the Short Sale Process. Ask me for details. Keep in mind that no matter which option you choose, there may be tax and other financial consequences. You should consult with a tax advisor or legal expert. .