Recently, the term Short Sale has become more and more used in the Real Estate market. You may have heard the term, but do you know what it means? Quite simply, it means selling a home for less money than what is owed. How can this be? It happens when a homeowner gets into finanical trouble and must sell the home instead of going into foreclosure, and is most prevalent when the market is in decline. Let's say a homeowner owes $500,000 on the property but the value of the home is $450,000...this would be subject to a short sale.
But, just because you sell short does not necessarily mean you are off the hook. First, it is upto the owner of the note (bank/lender) to authorize the sale and terms. Secondly, you may be subject to 1099 reporting (as income) by the lender.
Your Real Estate professional will be your negotiator and go-between with you and your lender. But, you should contact a good Real Estate lawyer to investigate all your options and discuss whether or not it is in your best interest to sell short.
Selling short may or may not be the best way to go however. You should contact an attorney to discuss your options.
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