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Avoiding Mistakes during a Short Sale

While a short sale is certainly something no homeowner ever hopes to have to face, it is becoming more and more of a reality for many people today. If you have found yourself in a situation where you are forced to consider a short sale as a solution to your current mortgage problem, it is certainly important to make certain that you avoid any possible mistakes. The short sale process can be fraught with possible pitfalls, particularly if you are inexperienced in this area.

First, always make sure that you have someone available to help you who is experienced with short sales such as a real estate agent, attorney or even a consultant who specializes in short sales. It is imperative that you ensure you do not inadvertently fall into a mistake while handling a short sale that could ultimately cause you even more problems.

In addition, if you are considering a short sale on your home, always make sure that you speak with your lender about this possibility first. Many homeowners make the mistake of believing they will be able to negotiate a short sale without talking to the bank. While it is possible that you could put the house on the market and find a buyer, the bank must agree to this in order for the process to be finalized. If the bank will not agree to sign off on the deal, you cannot complete a short sale. Instead, the lender will usually just foreclose on the property, therefore it is crucial that you speak to the lender first and obtain approval for a short sale before you proceed any further. Ideally, it is always best if you obtain approval for the short sale in writing so that you will have something to reference later if there should be any question about it.

You also need to make sure that you understand all of the possible ramifications to going ahead with a short sale. A short sale can be advantageous in many situations, but you could also find yourself being responsible for owning taxes on the difference between the sales price and the amount owed to the bank. The bank may also insist that you pay the difference between the amount you owe them and the sales price, even if they agree to the short sale. You should also not assume that just because you are able to avoid foreclosure that your credit record will be spared an impact. A short sale can still negatively impact your credit record and reduce your credit score even though it might not be as severe as would be the case with a foreclosure.

These can be very serious repercussions so before you decide to list the property for sale as a short sale it is always a good idea to consult a CPA and/or an attorney. You will need to make sure that you fully understand all of the possible outcomes related to selling your property through a short sale.

Furthermore, you should make sure that you take full advantage of a short sale if you have the opportunity to use it as a possible solution to your mortgage problem. In terms of your credit a short sale is not the most ideal solution, but it can be better than a foreclosure or bankruptcy in many situations. Once you receive approval for the short sale from the bank, make sure that you immediately begin to promote and advertise the property. You should also be sure that you are working with an experienced real estate agent, preferably one who has handled short sales in the past. Utilize every method possible for advertising your property, including the Internet, flyers, classified advertisements, open houses, etc. Also make your home easily available for showings and consider allowing a lock box to be placed on the door to facilitate showings for agents, even if you are not at home. In most instances a short sale will attract interest from buyers because they know they may be able to purchase the home for less than they would typically pay for a comparable home.

A short sale can be a good solution for many homeowners who find themselves in an undesirable situation, but only if you take the time to understand all of the possible repercussions and you ensure that you have taken necessary precautions to avoid some of the more common mistakes that are often encountered when handling a short sale.



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