Short Sale may be replacing ‘Sub-prime’ as the word of the year for 2008

so, what exactly is a short sale in Real Estate?

Selling short , or a ‘short sale’ means offering (and a lender accepting) lesser amount than money owed to the bank.

The good:

• salvage credit (potentially) and possibly avoid bankruptcy, ….
• Lender avoids a potentially larger loss and does not have to take ownership in their (REO) eal Estate Owned inventory

The bad:

• consumer gets a 1099 for taxes due on the discharged amount.
• Banks do not get to collect insurance from the PMI (private mortgage insurance) companies

Here’s what is required to get a short-sale approved by a bank. (a cursory explanation)

• Call the lender and speak with a short sale specialist
• provide a written ‘hardship’ letter
• Estimated Net proceeds sheet – sale price minus selling costs
• Bank Statements, tax returns, 1099, etc to prove hardship
• Listing Agreement and/or Purchase Agreement

Not all lenders will accept short sales. In fact, most ‘Short Sales’ have not been approved.

Finally, there are tax consequences to selling in a ‘Short-Sale’, so consult your CPA before you attempt a ‘short-sale‘.

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Copyright © 2008 By James Wexler, All Rights Reserved. *SHORT SALE … the new ‘Sub-prime’*

Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs