Don't Short Sell Yourself In A Short Sale

Hundreds of thousands of homes are in foreclosure or on short sale lists.

A short sale is one step short of a foreclosure. The home seller can no longer afford his mortgage and his bank or lender has agreed to accept less than the seller owes in order to avoid the time and expense of a foreclosure.

"A short sale is just one of several strategies to employ when your mortgage debt exceeds the value of your home or property," said Attorney Steven Einig, with Eingi & Bush, in Manhattan. "Other examples," said Steve, "are deeds in lieu of foreclosures and bakruptcy. This is a pre-foreclosure solution.

"If you are having trouble paying your mortgage every month; if you find your payments are just too high, first explore the possibility of refinancing/modifications, try to sell the property privately and pay off your debt.

"The problem with attempting a short sale," continues Steve, "is many banks won't talk to you unless you are in foreclosure already. They feel if you are current, you don't need help."
Steve also warns that short sales don't insulate you from downgrades on credit scores. It could be as bad as a foreclosure on your credit reports.

Finally, Steve recommends you discuss the tax ramifications with your accountant. You could be liable for taxes on the forgiven income.

So, important first steps to take, according to Steve: First speak to a financial advisor like your accountant. Have a realistic expectation and plan.

If you can not or do not want to speak directly with a bank rep, get a good attorney or real estate broker who can help you. A debt consulting company is not a good way to go; unless you have a very good rec ommendation or know someone personally. Exceptions are with tru non-profit agencies who are truly looking to help.

One final note, make sure any deficiency liability is waived.