Guest Author - Rose Mary
I thought it would be a good time to touch on the topic of real estate short sales in the real estate market. With the large amount of people facing foreclosure today, the opportunity has arisen to do what is called a short sale. Just what is a short sale, how is it done and can I do it?
A short sale is when a lender agrees to take less than what is owed on a mortgage. Not all lenders will agree to this but if you are facing foreclosure, it is definitely worth a try.
Why would a lender do a short sale? There are way too many foreclosures going on today which is putting lenders in a bad situation. Lenders do not want to be in the real estate business. They do not want to own property. Having all of these properties on their books does not make them look good. After all, they are in the business of making money on loans and servicing. Owning real estate stops their flow of money.
Do I qualify for a short sale? Most of the time, you must be late on your payments or in pre-foreclosure in order to qualify for a short sale. Since this is not necessarily true in today�s market you may want to explore this option prior to these defaults happening. Remember, a short sale may still show up on your credit report.
If you have a hardship and must sell your home, you may qualify for a short sale. But be prepared to document your hardship in detail. The lender may also want to see documentation such as bank statements to make sure you don�t have any available money in the bank.
The value of the home is also a factor in determining if you qualify for a short sale. If you owe more than the current value of your home based upon the comparable values of your neighborhood, then you probably are a candidate for a short sale.
Although there were tax implications at one time when the seller did a short sale, there are new laws in effect to protect against these tax consequences which is explained in detail in this news article by Tom Kelly.
So where do you stand at this time? If you think that a short sale may help you, it is time to seek a realtor who is knowledgeable and experienced with real estate short sales. They should be able to guide you through the steps for success. You will have to contact your lender and they, too, will give you the information you need to complete this type of transaction. It may also be necessary to speak to an accountant or professional tax preparer to make sure that you are covered under the Mortgage Forgiveness Debt Relief Act of 2007.