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A real estate short sale is where you owe more money on your loan than what you can sell the home for.  This is not an easy transaction in this current market, but it still is possible to get your lender to accept a lesser amount than what they are owed on the loan.

If you can no longer make your mortgage payments and facing foreclosure, your lender might agree to a short sale.  The key word is might. With the recent inflated real estate prices, lenders will be more reluctant to accept a short sale. However, a bank never wants to accept the house as a foreclosure and they might be willing to work with you.

The biggest benefit to you if you can get your lender to agree to accept a short sale deal is that you will not have a foreclosure on your record. A foreclosure on your credit record has a very negative impact to your credit report and can have long lasting effects. With a short sale, there will still be an impact on your credit score, but it is not as detrimental as a foreclosure.

One thing that you must keep in mind is that your lender may not simply write off the difference. The lender can report the difference of price as a gift to you to the IRS. This means you will have to report that amount as part of your income when you file your taxes the next year.

If you are having a hard time paying your mortgage and are considering a short sale of your home, please contact us and we can explain your options and the process to you.