A short sale in real estate is not always a pleasant transaction, but if done properly can be beneficial.

There are many ways to lose a home, but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For homeowners who can no longer afford to keep mortgage payments current, there are alternatives. One of those options is called a "short sale."

What is a short sale?

A short sale is when the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for a short sale.

More than half of all home sales in the last 12 months have been short sales. That's how prominent short sales have become. In recent years, even sellers who are not delinquent might qualify for a short sale.

What are potential drawbacks?

  • There is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid, so it is vital that you utilize a professional that can protect your best interests. In some states, this amount is known as a deficiency. At RIG Financial Solutions we can determine whether your loan qualifies for a deficiency judgment or claim.
  • There may be tax ramifications to a short sale.
  • It may have a negative impact on your credit.

For your protection, I suggest that all borrowers:

  • Obtain professional advice from a competent professional who will also negotiate on your behalf to assure that the process goes smooth and your credit is not damaged.
  • Call an accountant to discuss tax ramifications.

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