How to Do a Short Sale In Real Estate
Should you find yourself with a serious financial problem and no longer able to afford to make your mortgage payments, you might want to consider attempting to do a short sale. If you're allowed to execute a short sale, your mortgage lender has agreed to accept an amount less than the full outstanding balance of your loan as payment in full. A better alternative to bankruptcy or foreclosure, a short sale may or may not be possible. You must first submit a number of documents to your mortgage lender, who must then approve your request.
- Difficulty:
- Moderately Challenging
Instructions
Things You'll Need
- Your financial data (income and assets)
- Market analysis of similar home sales and those currently for sale
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Contact your mortgage lender. Don't just call or email customer service or the "loan workout" department. You need to speak with the manager of the problem loan department or another individual who has the authority to approve a short sale request. While mortgage lenders can be sympathetic to these problems, they are never anxious to allow a short sale. If you're uncomfortable in this role, let your lawyer, real estate broker or adviser negotiate with your lender.
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Write a letter "authorizing" your mortgage lender to disclose your loan information to real estate agents, lawyers, title companies or other interested parties. Your loan information is subject to privacy laws, so your lender needs your written authorization to release this data to anyone. At a minimum, this letter should include the property address, your name, your loan number (or other identifying data) and, if appropriate, a list of the parties to whom you wish this information to be given.
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Be prepared to pay tax on the amount forgiven at tax time. You will likely receive either a Form 1099-A or 1099-C.
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References
- Photo Credit Real Estate image by Stephen VanHorn from Fotolia.com
Comments
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This is simply and with all due respect not a good article. I understand that this is not a source of accurate and exact information, but with a little bit of collaboration from a Realtor, this article could be so much better!
