You may have heard the phrase “the property is underwater”. Properties that are “underwater” are worth less than the mortgage on the home. Therefore, if the property is sold at its current market value the homeowner would need to use some of his or her own funds to pay off the mortgage. In today’s poor economic climate many homes are underwater and their owners are generally unable to make up the difference. One possible solution to this problem is a short sale.
A Short Sale is conducted when the outstanding obligations owed by a homeowner on a property exceed the current market value of the property. The homeowner sells the property at it’s reduced market value and the lender agrees to accept a reduce figure. There are a few other things you should consider when agreeing to do a Short Sale. The sale will impact your credit and the difference between what the property is sold for and what is owed may be considered income on your tax returns.
To conduct a Short Sale you will need to fill out a packet for your Servicer/Lender to review. The bank will instruct you on how they want the property listed and for how long. You will need a broker to list the property and possibly an attorney to assist with paperwork and applications.
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