Before selling on a short sale and running out to hire the first
short sale agent you can find, think about whether a short sale is your best option. It might not be. It's possible that you could stay in your home if you can do a
loan modification. Although loan modifications seem to be few and far between.
You might also qualify for a short sale refinance program or possibly a state or local program designed to help you keep your home.
Is a Short Sale Right For You?
Make sure you really want to sell your home. Because doing a short sale means you have to move out within 30 days or so of
short sale approval. Sometimes, having to actually move comes as a shock to some sellers. They are often unprepared for this because much of the paperwork you will need to produce is the same as for a loan modification. Don't get lulled into thinking that you are not moving because when you sell as a short sale, you are leaving your home and all of its memories behind.
Overview of a Short Sale
Two essentials ingredients to selling as a successful short sale are to choose the right short sale listing agent and to choose the right buyer. Ideally, you would like to
hire an agent who has closed at least a 100 short sales. Ask the agent to show you a list of closed sales. And you want to go into contract with a buyer who has agreed to wait for approval and won't run off chasing some
cheap foreclosure that suddenly comes on the market, leaving you stranded, high and dry.
Qualifying for a Short Sale
Whether you qualify for a short sale will depend on how your personal situation has changed since you took out your loan. Your lender will want to know what is different now than then. You may be asked to produce sensitive financial documents such as tax returns, bank statements and your payroll stubs. Moreover, bear in mind that who your lender is will make a big difference on whether you qualify. For example, a
Fannie Mae short sale has different requirements over a regular short sale.
Comparing Short Sales to Foreclosures
Some home owners wonder if they should simply
walk away from a home. In all honesty, it's probably much simpler, and walking away is certainly less stressful, but is it the right thing to do? Would walking away give you closure? Or would you rather know who is buying your home and choose that buyer yourself? Most sellers who opt for a short sale do so because they want to control the situation, not turn that control over to the bank. Plus, they want to reduce the hit to their credit and try to avoid a
deficiency judgment, if at all possible.
Short Sale Tax Consequences and Effects on Credit Reports
The financial impact of a short sale is paramount. You need to know if you'll end up paying taxes or whether the short sale will affect your ability to buy another home after a short sale. Because of the waiting period, some people think they can
buy a new house and short sale the old house, but that plan has its own set of problems. It is always imperative to get tax and legal advice before considering a short sale. Knowledge is power.
