Short Sale

A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. The downside to a short sale is that it takes time to sell a home even at a bargain in such a defunct housing market. There are foreclosures on every block, housing prices are rock bottom, and selling a short sale is next to impossible. The entire time the home is on the market you are still responsible for your mortgage payment, taxes, and insurance. If you have stopped paying your mortgage, during the short sale you can still remain in the property and the lender will usually not be as aggressive in executing the foreclosure process. The best case scenario is if you see where soon you won't be able to pay the mortgage and decide to exercise this option during which you strive to continue to pay the mortgage. If you would like to pursue this option, or get further information, we can also be of assistance.

A Short Sale more often than not will result in the lender agreeing to accept an amount that is less than what is owed on the property. As a result, the lender may decide that the loss that they will experience may be handled as a cancellation of debt and may therefore send you a 1099C. You may want to consult a tax advisor on this matter for full clarification and (if) there will be any possible consequences.