Short Sales FAQs – What is a Short Sale?

What is a Short Sale?

A short sale is basically a “forgiveness of debt.” That counts as income and you have to declare it to the IRS.

For a variety of reasons, it is possible that the total debt on your home may be more than what the home is worth. In most cases, you would wait it out until the value goes up. We have seen in the current economic times, this is not always possible. There are many homeowners that absolutley must sell their home.

This can happen for a variety of reasons: relocation, financial hardship, divorce, death, illness, etc. The result is that you may have to move, but you can’t sell your house and make enough on the sale to pay the closing costs. So what are your options?

You can enter into something called a short sale. This is when you contact your lender, let them know about your hardship and ask them to accept less money than you owe on your mortgage.

Of course, the lender doesn’t want to do that, but they also don’t want to pay all the costs of foreclosing on a home, repairing any defects, placing it on the market, and getting the best price they can in what may be a market already overstressed with excess inventory. Lenders absolutely hate to foreclose, so they may be willing to consider a short sale.

A short sale involves a lot of paperwork, time and effort and it is best if you have a real estate agent or someone knowledgeable to help guide you through the process and give moral support. A lot of stress is involved. Please contact Darrin with any questions at (970)846-5551 or email darrinfryer@earthlink.net .