Terry White CPA
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Short Sales
What is a Short Sale?
A short sale is a sale of a property for a price that is less than the amount of the mortgage.
A short sale is a tool that can be used to stop the immediate sale of a property by the lender.
A short sale normally requires the approval of the lender.
A short sale can sometimes allow a borrower to remain in a home for a number of months while the lender decides whether or not to accept a potential buyer's bid.
A short sale can often be used to allow the lender to remain in a home for some time after a bankrupty.
If there is only a first mortgage on the property, the lender normally cannot sue to collect the difference between the amount of the mortgage and the amount realized from the short sale.
If the the property has two or more mortgages , there is a good chance the lender can sue the borrower for the difference between the proceeds of the short sale and the amount of the mortgages.
A short sale may result in the forgiveness of debt. This could produce taxable income for the borrower. A borrower should contact a tax professional about the possible tax consequences of short sale.
A short sale should be considered only when there is no possiblity of a loan modification.
A person should consult a local realtor or real estate attorney about the legal implications of a shor sale.
What I Can do For You
If you live in California, I can direct you to a realtor who specializes in short sales. If you live in other parts of the nation, you should consult a person who is familiar with your state laws.
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