A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property. In addition, the property owner cannot afford or chooses not to repay the liens full amounts.
Therefore, the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency.
Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties. That is why finding the right short sale specialist is important.
Banks do not want to take assets back. With the amount of work it takes to foreclose and the losses incurred, it is easier to facilitate a short sale.
There may be tax consequences to a short sale but every situation is unique. Maybe you heard that you should not do a short sale or you will get taxed…
Does It Hurt My Credit?
Yes a short sale will have an impact on your credit. But so does the 30 day late, 60 day late & 90 day late missed payments. Most lenders will consider a 90 day late the same as a foreclosure status on your credit report.
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