Short Sale Mistakes That Can Cost You

Short sales are not easy for anyone involved—but most of all for the sellers. The web is filled with so many websites on how your credit can be affected, how one option to avoid foreclosure is better than the other—it is so hard to find the truth! The truth? Bottom line, every situation is different and you shouldn’t be making a decision about a short sale without talking to multiple experts about your unique situation. So which experts should you talk to? Not just one, but ALL of the below, need to be spoken to prior to knowing if a short sale is the right move for you:

Real estate agent/broker:
Find out what the market value is on your home through having the agent establish fair market value and to prepare your estimated proceeds from the sale. If looking at market value you cannot pay off the loan in full, one of your options would then be a “short sale”. This would be a good time to make sure this agent is familiar with short sale proceedings as well.

Tax advisor:
This is the important step many are skipping over! I just had a client call me today, ready to list his home short sale. I asked him about if he had talked to his tax guy. His answer? “No”…well, after insisting that he double checked he was so thankful. He thought he didn’t have to pay taxes because it was his principle residence but due to some catches on his refinancing, he would have had to pay upwards of $10,000 to the IRS! Bottom line: Do not take this info from anyone BUT your tax advisor. And if you don’t have one, pay for a one hour consult or you will regret it later.

Lawyer:
Only a lawyer can really tell you if a short sale is your best option. For many clients who I have insisted they visit a lawyer—they have found that bankruptcy was a MUCH better option for their situation. It is worth paying for a one hour consult to make a decision that could impact you for a long time.

Credit Counselor:
While there is a lot of conflicting information out there on websites over how a short sale vs. deed in lieu of foreclosure vs. foreclosure can affect your credit, I have found the only ones truly willing to talk about it are the credit counselor’s.