Question:

What is a short sale in real estate?

Answer:

Those who have been through a threat of foreclosure certainly know what is a short sale in real estate - it is the better option to take, should the lender agrees on a short sale.

Instead of filing for bankruptcy or going through a public foreclosure auction, a short sale of your real estate will rid you of mortgage debt and your credit history will go unharmed. The lender agrees to accept amount that is less than the original debt owed on the property, and will do a short sale in real estate.

Basically, a short sale in real estate and mortgages is the lender's attempt to mitigate a pending loss.

Not every home seller or property qualifies for a short sale.

It is difficult to persuade the lender or bank to take a short sale, especially when it makes more financial sense to go through foreclosure. However, though, since the lender has to pay the foreclosure costs, they sometimes agree on a short sale.

Do you pay taxes on a short sale in real estate?

Even if the lender takes a lesser amount than it is due, the home seller should know that the debt forgiveness is most likely to be considered as income; also, there is no guarantee the lender won't file a deficiency judgment for the remaining amount.

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