Short Sale Q & A - What are the Pros and Cons of Short Sales

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Short Sales in Charlotte NCShort Sale Q & A - What are the Pros and Cons of Short Sales

Q -  What are the pros and cons of a short sale ?

A -  A short sale occurs when your lender agrees to accept less than the balance remaining on your home.  It is a way for you, as a seller, to avoid foreclosure and sell your home.

For those who owe more on their home than it’s worth, it sounds like a great way to avoid foreclosure but, that doesn’t mean it is right for everyone.  Should you consider a short sale on your home? 
My first advice is to consult either a tax attorney or your CPA as well as a real estate attorney who specializes in handling distressed properties.  There are pros and cons to doing a short sale; with regards to your options, consult a real estate agent who specializes in short sales.

Pros to doing a short sale:

Short Sales in Charlotte NC•    You will be able to sell your property, get out from under a mortgage you cannot afford and lower your debt.
•    You are still able to sell your property in a declining real estate market, even if you owe more than your home is worth.
•    Buyers who couldn’t previously afford a home in a popular market area, may now be able to buy a home at market value in that area.
•    While a short sale isn't always an ideal situation, it is typically better than a foreclosure, which stays on your credit report for 7 - 10 years.
•    If your home does into foreclosure and is sold at auction for less than the mortgage, you can still be held responsible for making up the difference.

Cons to doing a short sale:

•    Your lender may refuse to do the short sale, or they may still hold you responsible for the remaining debt.
•    The bank’s loss is considered taxable income for you, and you may have to pay taxes on that amount.
•    Short sales do stay on your credit report for approximately two years and may make it difficult for you to a get loan in the near future.
•    You may have to find a real estate agent willing to work with short sales.
•    Short sales take longer to close than traditional home sales.

Our short sale team can review your options with you in order to help you decide if a short sale on your Charlotte NC home is right for you. Call today - (704)491-3310 or email to discuss your options.


Re-Blogged 4 times:

Re-Blogged By Re-Blogged At
  1. Agent Aaron Vaughn Listing Specialist 05/24/2010 04:02 AM
  2. Gabe Sanders 05/24/2010 07:06 AM
  3. Maria Mastrolonardo 05/28/2010 01:55 PM
  4. Kathryn Maguire 05/31/2010 09:32 AM
Lending / Financial
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Agent Aaron Vaughn Listing Specialist
Capitol Home Team | Austin TX - Buda, TX
The $500 Million Marketing Advantage

Debe: As usual, you make great points. And your information about short sales is very thorough and helpful. Thanks!

May 24, 2010 02:07 AM #1
TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029

Debe, Helpful information. I have not heard it quite explained like this. Thanx...

Helping you help others live their American dream...

May 24, 2010 05:28 AM #2
Gabe Sanders
the BlueWater Realty team specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Debe, great compact explanation of how short sales work.  I'll re-blog this one.

May 24, 2010 07:05 AM #3
Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC
Waters Realty of Brevard, LLC - Melbourne, FL
... a small office, delivering big service!

Nice summary of the short sale pros and cons. It is an option although consultation with an expert(atty, real estate agent, CPA) helps sellers come to the best choice. Sometimes a bankruptcy filing even is called for..

May 24, 2010 07:10 AM #4
Gerry Michaels
Glasswork Media Arts - Gettysburg, PA
GettysburgGerry Social Meida

Debe, I think part of the problem is that their are agents out there who are not telling the whole story as you are doing. Short sales can be very problematic as you say, the difference in the sale price and the loan amount is almost always taxed, and the non payment of debt stays on your credit as an unfullfilled obligation for 5 years. I think it is great you bring out the truth and not just selling snake oil to homeowners that are already in trouble. Great post

May 24, 2010 07:21 AM #5
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

"The bank’s loss is considered taxable income for you, and you may have to pay taxes on that amount."

Debe this would be the case if the property was NOT your primary residence. You might want to make that clear in your post:)

May 24, 2010 08:00 AM #6
Dick and Dixie Sells
Sells Real Estate, LLC - Trinity, FL
Realtors, Tampa Bay Florida Homes For Sale

Debe- We work short sales here in Tampa Bay and you gave a very good explanation. Short sales are not the perfect answer, but if done properly definitely are better than foreclosure in most all cases. Sellers should speak with a knowledgeable CPA and legal consul prior to listing their home.

May 24, 2010 08:18 AM #7
Kristin Johnston, Waukesha County Realtor 414-254-6647
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Great, easy to read and understand information for folks who don't understand Short Sales...great job!

May 24, 2010 09:56 AM #8
Cherise Selley
Selley Group Real Estate, LLC - Colorado Springs, CO
Colorado Springs Realtor


Thanks for the pros and cons.  It seems like the Realtors here (including me) are showing less short sales because of the bank hassles.  We're not trying to avoid the difficulties, however, the buyers are staying far away from them.

May 24, 2010 03:20 PM #9
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL

Debe - This is a really great post for home owners about the pro's and con's of short sales, one that most will easily understand.

May 24, 2010 05:46 PM #10
Keller Williams Capital Properties-Buy a home in Washington DC. Sell a home in Washington DC - Washington, DC
How much is my Washington DC House Worth?

Nice and concise. I was trying to rhyme either Debe. Patricia Kennedy's blog brought me here. Thanks for sharing. Have a great and safe Memorial Day Weekend. Great post.

May 30, 2010 03:48 PM #11
Margaret Rome, Baltimore Maryland
HomeRome Realty 410-530-2400 - Baltimore, MD
Sell Your Home With Margaret Rome

Debe, Good information that you make look pretty and easy for all to understand.

Thanks to Pat Kennedy for pointing me to this post.


May 30, 2010 09:40 PM #12
Marcy Moyer
Keller Williams Realty Palo Alto Probate & Trust Specialist - Palo Alto, CA


VEry clear and to the point article. I am frequently asked by sellers why would a short sale be better and while each case is different, it appears that short sales will be a bad credit hit for fewer years than foreclosures.


May 30, 2010 11:27 PM #13
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M
Debe - This is well done and gives people a basic understanding about the pluses and minuses of short sales.
May 31, 2010 01:06 AM #14
Kathryn Maguire (757) 560-0881 - Chesapeake, VA
Serving Chesapeake, Norfolk, VA Beach

Hi Debe, in Virginia, we have a form for sellers that are subject to a short sale that explains the pros and cons.  However, it was designed by attorneys.  Yours is shorter and much more elegant.  And readable.  Thanks for a great post.  Hope you don't mind if I reblog this one!

May 31, 2010 09:31 AM #15
Lori Liveston
Virtual Homes, Real Estate - Waltham, MA

Great post Debe.  Short sales can be a great alternative to foreclosures but sellers need to be aware of the cons as you have pointed out.

Jun 01, 2010 09:52 PM #16
Susan Brown
Keller Williams NE, Kingwood Texas (Humble & Atascocita too) - Kingwood, TX

Debe - Great list of pros & cons on Short Sales.  When homeowners find themselves in uncharted waters it is great to get a lifeline like your list!

Jun 02, 2010 12:34 PM #17
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Debe Maxwell

Charlotte Homes for Sale - Charlotte Neighborhoods
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