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Is a Short Sale Right for Me?

A short sale is the sale of a property when the amount on the outstanding mortgage is more than the sale price. If you are wondering if a short sale of property is the right choice for you, it is a highly individualized situation. However, there are some circumstances and factors that commonly apply to sellers of short sale properties.

Any property transaction can involve state tax and real estate laws. Real estate laws are different in every state so it is important to talk to a local real estate lawyer for legal advice for your individual situation.

What Is a Short Sale?

If you are behind on your mortgage payment and unable to keep up with all of your monthly obligations due to a sudden change in monthly household income, loss of a job, job transfer, health problems, or divorce, a short sale might be an option for you. A short sale allows you to sell your property to your lender for less than you owe on the loan. If it is approved, the sale can satisfy the entire remaining mortgage debt.

Most short sales are in lieu of foreclosure. Usually, the home is for sale or already has a buyer. However, you should consider the effects a short sale may have on your credit score in deciding whether a short sale is a good fit for you and your property.

How Does the Short Sale Process Work?

The first step in a short sale generally is to contact your lender and determine what is required to initiate the process. You may also want to consult with and/or hire a realtor, real estate lawyer, or other industry professional to guide you through the process. If you work with a real estate agent, you may be required to submit a Letter of Authorization to your lender to give the company permission to disclose your private financial matters with your agent.

Once you have been in contact with your lender, you will be given instructions for how to proceed with requesting a short sale. You may be asked to provide documentation, such as a “Hardship Letter,” and current bank and financial statements, to determine whether you and your property qualify for a short sale. It can take a few weeks or a few months to get an answer from your lender about whether you qualify and complete the transaction.

Should I Buy a Short Sale Home?

Buying a short sale home after it’s been sold back to a lender can be a great deal but it also comes with potential obstacles and problems.

Banks and other lenders generally do not like managing properties, so they often are motivated to sell properties they acquired from borrowers in short sales and foreclosures. That can mean as a buyer, you can get a good price on a short sale property.

However, short sale properties may have maintenance and repair issues if the former owners didn’t have enough money to keep up with the payments or maintain the property. When considering whether to buy a short sale home from a bank or other lender, it is important to have an independent appraisal and home inspection of the property to determine whether the home is a sound investment.

Speak to an Experienced Real Estate Attorney Today

This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified real estate lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local real estate attorney to discuss your specific legal situation.