I love helping homeowners avoid foreclosure. It give me a lot of satisfaction when we close a short sale and they can move on with their lives with credit intact.

Yet, there is more to know about short sales than how to get the buyers to make offers and how to get the lender to approve one of the offers.

If you are contemplating selling your house with lender approval because you have no equity, do some homework first.

1. Talk to your tax expert or CPA. There is an IRS form that can be filed with your taxes which will address the consequences of selling at a loss. If the lender issues you a 1099, what impact will that have on your tax liability? If you handle your own taxes, feel free to contact me. My husband is a tax professional, who is happy to answer your questions. (No obligation, of course!)

2. Talk to an attorney to learn about your legal rights, the difference between short selling your home, declaring bankruptcy, and foreclosure. Every state is different. In some states, the lender has the right to “come after you” with a deficiency judgment.

3. Put a call into your lender. Find out if they approve short sales. If you have a 2nd mortgage that is not purchase money, but a line of credit, ask if it is a HELOC. If it is, the lender will not be willing to discharge your debt. It’s like a credit card debt that is not tied to the house. You might be asked to sign a note for the debt and make payments.

Get the facts before you have a realtor list your home as a short sale. It will make the whole process a lot easier in the end.

with blessings,
Claudia

This entry was posted on Sunday, August 17th, 2008 at 2:18 pm and is filed under Short Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.