If you live in a home that you can no longer afford, you may have the need to sell this house quickly. Unfortunately, houses do not always sell fast, especially when there are few buyers around looking for homes to purchase. If you are in this position, you could consider selling it through a short sale. If you want to do this, there are several important things you will need to know:
What is a short sale?
A short sale is a transaction you and your lender agree to that allows you to sell your house for a price that is below your current balance on your mortgage. For example, if you owe $150,000 on your house and sell it through a short sale, you could sell the house under this amount instead of trying to find a buyer that will pay more than this.
This type of deal comes in very handy for people who have underwater mortgages or that need to sell right away. Selling through a short sale is something a lot of people do if they are about to lose their homes through foreclosures. Before you can sell your house this way, you must get approval from your mortgage lender.
How does a short sale work?
When you sell through a short sale, you can hire a real estate agent and sell the house just like you would if you were using a traditional method for selling your house. You would have to tell your agent that you are using a short sale so that he or she knows, but the process if about the same in either case.
Are there any negative consequences of using a short sale?
If you sell through a short sale, you should find out from your lender what the consequences will be. In some cases, there are no consequences. In other cases, there can be two main consequences.
The first is that the seller would be responsible to pay the deficit to the bank. The deficit is the difference between the amount you owe and the amount you sell for. The other consequence is that you might have to claim the deficit amount as income on your tax return, and this could cause you to owe more taxes on your return next year.
Trying to sell a house quickly does not always work unless you are willing to lose a lot of money on the deal. If you would like to learn more about short sales and how they work, contact a real estate agency in your city like Mckee Kubasko Group Real Estate.