Question:

How to do a short sale?

Answer:

Knowing how to do a short sale doesn't hurt. If you are a troubled homeowner facing foreclosure it would be a blessing if the lender agrees to accept a short sale to satisfy the debt. That means the lender will accept an amount less than what is originally owed to satisfy the debt.

Why a Lender Won't Take a Short Sale

Have in mind that if you have significant equity, your property is not a proper candidate for a short sale. You may get a better deal even if you go through foreclosure. Also, not every lender may be willing to take a short sale. A large bank may not agree. The reason large lenders rarely agree to short sales is that they are holding a whole bunch of properties in their portfolio and accepting short sales for many of them would cause mass depreciation in the area. Large lenders do have a lot of reasons not to do a short sale.

However, if your lender agrees to a short sale, you may like to get ready. You may need a lawyer or a certified accountant to advise you through the process. Often, the lender may decide to pursue the borrower for the remaining loan balance. Or, you may need help with tax calculations, as the unpaid loan balance counts as income and you have to pay tax on it. In any case, to agree for a short sale and have deficiency judgments filed against you doesn't make sense. So, if you are considering short sale, you'd better use legal help in the negotiation.

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