10 Short Sale Considerations
A short sale is no always the best route. These short sale considerations will help you understand more about the process and the implications. If you are behind on your mortgage payments and considering a short sale, here’s 10 things to consider.
- Even if you find a buyer for your property, your investor (lender) must approve the sale and terms of the contract.
- Be prepared for a mountain of paperwork and documentation. It’s just the nature of a short sale. It’s going to require a lot of patience and diligence.
- You’ll need to be able to provide proof of financial hardship to qualify for a short sale. This is an essential requirement.
- Short sale transactions take longer to close. Sometimes it takes 2-3 times as long as a normal transaction. Both Buyer and Seller need to be flexible because the Investor determines the timeline.
- The Foreclosure process may continue while the short sale is being processed and there is no guarantee that foreclosure will be postponed.
- If other junior lienholders are involved they must agree to the short sale for it to close.
- If the Seller has assets like cash, money market funds, or other non-retirement investments, the Investor may require the Seller to make a cash contribution toward the short sale.
- It’s possible that the Investor may seek repayment of the deficiency. This is not always the case, but it is possible.
- Depending on the current law, forgiven debt may be taxable.
- A seller can expect their credit score to be negatively impacted, but not nearly as much as in the case of a foreclosure.
Article: What is a Deficiency Judgement?
Understanding these short sale considerations will help you determine if this is the right path for you. Only you can make this decision. That being said, my job is to help you understand your options.
