St Pete Beach office
A short sale is not an easy way out of a depreciated real estate investment. Lenders are not quick to release their borrowers from their deficiency, which is the difference between the outstanding note and the net proceeds from the sale. Education “up front” is vital, as the short sale process is typically not short. A tax advisor or real estate attorney should be consulted before the property is listed as a short sale.
Depending on current laws, sellers may receive “temporary relief,” (i.e. release from the deficiency), if the property is their principle residence. On the other hand, lenders may want sellers to sign a deficiency letter, allowing the sale, but not releasing the borrower from the deficiency, or shortfall. Any forgiveness of debt may also be taxable by the federal government as taxable income.
I suggest you speak to your lender about loan modification before you venture down the long “short sale” road. Still considering a short sale? Check out this link to help to understand what might be in store for you: http://www.usatoday.com/money/economy/housing/2009-08-04-short-sales-mortgages_N.htm
I’d love to hear from people who have gone through the short sale process, successfully or unsuccessfully. Readers, what have your short sale experiences been?