What is a Short Sale? Selling Your Home for Less Than You Owe

Dec. 29, 2008 - PRLog -- If you've taken out a large mortgage, and perhaps refinanced to cover remodeling or other expenses, you may find yourself unable to keep up with your mortgage payment after a layoff, divorce or illness. Real Estate Loan Negotiation Services can assist you in negotiating a short sale with your lender if you need to sell your home for less than you owe on the mortgage. Selling short is definitely better than foreclosure, which stays on your credit record for ten years. But it's best to try to work things out with your lender before going through the embarrassing and laborious process of selling your home on a short sale.

Tax Issues - Before you put your home on the market for a short sale, it's best to talk with a tax advisor about possible tax repercussions. It's likely the IRS will consider the difference between the value at which you sell your home and the mortgage balance as "income" on which you'll have to pay taxes. An exception to this rule is if you can prove that you were "insolvent" - that your debts were bigger than your assets before your mortgage lender agreed to a short sale of your property. A tax advisor will be able to tell you for sure whether you'd be considered insolvent by IRS standards. If you can't prove you're insolvent, and the tax bill on a short sale would be more than you can pay, you may have to let the mortgage lender, foreclose or declare bankruptcy.

Be Upfront With The Real Estate Agent - You will want to find a real estate agent that sympathizes with your situation. If you find selling your house for less than you owe on the mortgage an option short of foreclosure or bankruptcy. Agents typically take a much lower commission on short sales, and it often takes much longer to actually close the sale once the seller accepts an offer. But many agents sympathize with financial problems brought on by unexpected circumstances, and may want to help.

Convincing Your Mortgage Lender - Real Estate Loan Negotiation Services will help in negotiating a short sale approval with your mortgage lender. The bank will have to be convinced that you deserve to be approved for a short sale. Now is not the time to purchase luxury items, like fancy cars or jewelry. Your lender will think you waste your money and don’t deserve a break after seeing these debts on your credit report. You may need to provide the lender, either through the buyer or buyer's agent or directly, documentation of your financial hardship, such as paystubs, bank statements, etc. This may seem like an invasion of your privacy, but may be the fastest way out of an overwhelming debt. Let Real Estate Loan Negotiation Services help you plan accordingly, short sales take much longer to close than conventional sales. You can avoid a mark on your credit report and bankruptcy, if it works. If it doesn't work, at least you've done everything you could do to avoid bankruptcy and foreclosure.

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