Shortsales Fall Short

Another route people will sometimes take when facing foreclosure is doing a “short sale”.  A short sale means that you sell your house for the current market value which is less than you owe on the house and you get your lender to agree to it and take the lesser amount. 

Often people facing foreclosure will consult a realtor, perhaps the very one who sold them the home they are living in, and the realtor will recommend a short sale.

Realtors usually recommend short sales for two reasons:

1)     That’s what they know;

2)     And they make a commission when they short sell your house!

However, what they don’t often say is that they are severe consequences to short selling your home:

1)     You have to move!!  If you sell your home, you will have to find a new place to live and incur the expenses of moving and getting a new place.

2)     You may be liable for a deficiency judgment!  A deficiency judgment means you can be SUED for the difference between what you owed on the mortgage and the net amount realized from the short sale.  THAT COULD BE A LOT OF MONEY!  With a deficiency judgment, the lender could seize your bank accounts, garnish your wages, and take other action as permitted by law to collect the judgment.

3)     You may get a 1099 from the lender and have a tax liability!  The lender can issue you a 1099C (Cancellation of Debt) for the amount that is the difference between what you owed on the mortgage and net amount realized from the short sale.  Getting a 1099 means that that amount has been reported to the IRS as taxable income to you!  You now may have a tax liability and owe the IRS money!!

So you can see that doing a short sale is usually not a good idea.  So what is the solution that will NOT fall short? Click here NOW.