language of the Short Sale addendum that agents and buyers and seller should be aware.
Foremost, sellers are advised that they explore all options available prior to a short sale; Primarily due to the fact that lenders are not apt to accept a short sale unless the seller is truly in financial hardship and do not have much or any money available at all.
- The first step is to draft a hardship letter explaining the situation including supporting bank account information, tax returns, etc... to expedite the claim.
- Sellers need also be advised that the short sale will almost certainly effect their credit score negatively.
- Importantly, the seller need to be aware that the sell is unlikely to forgive the debt (short sale deficit) obligation completely.
- The seller will likely receive a 1099-S from the bank for the deficit of the short sale; this is considered a relief of debt from the IRS and may be treated as income for tax purposes.
- Finally, the seller is advised to speak with an attorney and CPA.
The above information may sound intimidating.
However, it is critical that this AAR Revised Short sale addendum is read and understood by real estate agents prior to advising sellers and taking listings
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