Facing a short sale or possible foreclosure of a home is a tragic and stressful circumstance for a property seller. Sellers who find themselves in this situation may have other options and should discuss their situation with an attorney and a tax advisor.
Here are some of the questions that a seller should ask of these professionals:
- Which of the following options will result in a better outcome for me? A repayment plan, a forbearance plan, a loan modification, a short sale, a deed-in-lieu-of foreclosure, a bankruptcy?
- Which of these options has a more adverse effect on my credit rating?
- How do I know if my property and I qualify for a short sale?
- How long will a short sale take?
- What are the tax implications of a short sale?
A seller who is contemplating a short sale should understand some of the basics of short sales.
- There may be negative credit and tax consequences.
- The lienholders are not obligated to approve a short sale or release the seller from further liability upon approval of a short sale.
- The seller may be required to demonstrate financial hardship and evidence of financial assets.
- The seller will be required to obtain approval of any contract of sale from the lienholders.