Short Sales

Everyone has heard about them; but few understand how they work and how it might affect you in the future. There are many reasons to consider a short sale, and the decision to go through a short sale is not always black and white. Let us help you weigh all the options, as there may be alternatives that are better suited for your situation. Our staff at Croteau Real Estate Services is ready to help you with those difficult decisions. There is no cost or obligation for our agents to consult with you.

If a legal referral is needed our partner at Croteau Law  can provide that too. Also at no cost or obligation. Before you pull the trigger on a short sale as a seller contact us to understand all your options, and get a first or second opinion.

What is a Short Sale?

Also known in the mortgage and real estate industry as a “pre-foreclosure sale” a short sale is when you sell your home for less than the balance remaining on your mortgage. After the housing collapse in 2007 the United States Congress introduced the Mortgage Forgiveness Debt Relief Act, which was officially signed by George W. Bush on December 20, 2007, and was extended until January 1, 2014. This act allowed for the remaining debt, the difference between the remaining mortgage debt and the amount you were able to sell it for, to be forgiven. Prior to and after the discontinuation of this act the the Internal Revenue Service (IRS) considered the difference between the mortgage loan amount and the selling value of the home to be income for the home buyer, resulting in taxable income. During this act, this amount was considered canceled debt and the homeowner simply filed a Form 1099-C showing the canceled debt amount.

The same rule applies to a short sale, loan modification where the principal was reduced, and foreclosures. And while this act was not extended at the beginning of 2014, there are still many open actions calling for it’s return and the debate is still on the table.

Why a Short Sale instead of a Foreclosure?

A short sale may be an alternative to a foreclosure and may be the best option for you for any of the following reasons:

• You are facing a long-term hardship and would be unable to pay your mortgage
• You do not qualify for mortgage loan modifications or refinancing options
• You are significantly behind on your mortgage payments and don’t want to face foreclosure
• You owe more on your home that its value
• Your attempts at selling your home have been unsuccessful at a rate that covers the amount you still owe on  your mortgage
• You can not afford your home, or are ready to or need to leave

A short sale is a big decision to make, and understanding your options and alternatives makes for the most educated decision. Have a conversation with a Croteau Real Estate Services agent today, and one of our Croteau Law attorneys to help you make the right decision.