Sellers- Is a Short Sale Right For You? 6 Questions to Answer

I always warn buyers of short sales, they often can take too long to close, and may not ever close after months of being in escrow. For sellers the issues are different, to qualify as a short sale the home can no longer be worth the amount that has been borrowed against it, and the sellers have to have reasons why they can no longer pay the mortgage. Not a good position to be in, it does happen, and if you think that you are in this position, answer the following questions:

1) Does your home qualify? Check with your mortgage holder, but usually there has to be a drop in home values, a mortgage that is in or is near default, and a home owner who is unable to pay due to hard times.
2) Does your Realtor know what to do with a short sale? There are special certifications, or your realtor can have been through the process before, either way make sure that they are willing to stick it out!
3) Have you talked with your lender? There is a special packet of information that each lender will require, and a protocol to follow. Talk to them first to get the ball rolling, and make closing easier for the buyer in the future.

4) Will I accept the tax consequences of a short sale? Contact a tax specialist to see what the impact will be for you, you don't want to get a surprise tax bill after going through the long short sale process.

5) Can I handle the impact it will have on my credit? A short sale will damage your credit, consult with a financial advisor to see how much, and if that is the best option for you.

6) Do I have alternatives? Some lenders are willing to renegotiate your monthly payments, and the government program Hope for Homeowners can give you more information. Think outside of the box, if the payments are the problem consider taking in a roommate, or renting the whole house out while living in a smaller apartment.

If you do need to do a short sale, get a qualified team behind you, a Realtor, tax expert, a financial advisor, and an attorney are all good resources for information and support.