A number of homeowners decide to let their homes go to foreclosure because they are not familiar with how short sale works. These are some of the most common misconceptions I hear:
1. I don’t have money to pay for the commission to sell my home.
2. I can’t afford to make the necessary repairs to my home.
3. I was told that I have to pay taxes and the lender for the deficiency resulting from the sale.
Here are the facts:
- On a short sale, the lender who holds the loan pay for the deficiency, the commission and all the cost of selling. Because of this, the sale is subject to the approval of the lender. The owners do not spend anything on the sale of the home. All they need to do is to cooperate with the sale and make the house available for showing and to keep he house in good showing condition as much as possible.
- Sellers do not have to make repairs they cannot afford. The house is sold in it’s present condition. They do have a duty to disclose any material facts about the house. It is highly recommended that they keep the house as neat and clean as possible to get the best price possible to minimize the deficiency.
- It is strongly advised that sellers seek counsel with their tax accountant regarding tax consequences. They may also check the IRS website and read the publications regarding the Mortgage Debt Relief Act and Cancellation of Debt at www.IRS.gov or call the IRS tax assistance line for tax questions at (800) 829-1040 in order to fully understand the matter.
The consequences of foreclosure is more damaging than a short sale. Before making the decision to walk away from your home, talk to a qualified real estate professional who has the know how. Not all agents are knowledgeable when it comes to short sales. Choose one who has received the proper training in order to get the correct information.
Elizabeth M. Eugenio
(909) 376-8615
Certified Distressed Property Expert, Certified Residential Specialist, Graduate Realtor Institute
Century 21 Superstars
DRE# 01126934
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