Why do lenders agree to short sales?

Lenders accept short sales to avoid the time consuming and high financial costs of a foreclosure. The lender saves more money on a short sale than on a foreclosure, thus making it a good deal for both the borrower and the lender.

How long does a short sale take?

Lenders differ in their requirements and processing speeds. A short sale can take 3-6 months, occasionally longer.

Why do a short sale?

A successful short sale will completely satisfy your debt. The lender will accept less than what is owed on the mortgage and forgive the remaining debt. A short sale will show up as "debt paid" or "debt settled" and within 2 years, most homeowners are ready to buy again.
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A foreclosure will appear on your credit as "debt not paid" and will remain a black mark for 7 years or more.

Can a short sale be done with two mortgages on a property?

Yes. The process is the same.

Does the homeowner pay the Realtor's commission?

No, the homeowner does not pay any real estate fee, the lender does. Although the lender pays the Realtor's fee, we work for you, the homeowner.
We will also help negotiate relocation fees for you, the homeowner, from the lender.

What about the other real estate fees?

In a traditional home sale other costs include title fees, taxes, attorney fees.
The good news is that we negotiate with the lender to forgive a significant amount of debt and to pay all the fees of the sale.

​Is the homeowner liable for taxes on the remaining debt?

The Mortgage Forgiveness Debt Relief Act, created in 2007 relieved homeowners of having to pay taxes on lender-forgiven debt. This law was renewed every year and recently expired in 2020. Unless the law is renewed again, you will receive a 1099-C and you will be liable for taxes owed on the amount forgiven. Check with your CPA to see how this affects you.

There are also tax ramifications in foreclosure. Homeowners will receive a 1099-C in a foreclosure and this may be taxable. The amount of 'debt' the homeowner will owe taxes on in a foreclosure is likely to be higher than in a short sale as foreclosures sell for a lot less than market value. Homes in a short sale sell for closer to market value so the amount you will owe taxes on is likely to be less than the amount owed in a foreclosure. Also, in a foreclosure, you may be sued by other lien holders.