With the financial crash of 2008 came a new term for many buyers and sellers of real estate: short sale. A short sale is the sale of real estate where the proceeds of the sale will not pay off all the liens and encumbrances against a property.
If you are a homeowner and the balance due on your mortgage exceeds the fair market value of your home, can you still sell your house? The answer is Yes…through a short sale. You will need the consent of all lienholders, including your mortgage lender, in order to do so. A lender is not required to accept less than the full amount due on a mortgage and they do not have to consent to a short sale. Even if the lender agrees there can be significant tax ramifications to the property owner. At Cramer & Anderson, we can help you determine if a short sale is right for you and will discuss with you the issues of a deficiency judgment, loan forgiveness and the tax consequences associated with a short sale (which can be significant).
As a buyer of a property in a short sale you may be able to obtain the property at a great price, however, there are other issues to consider. A home inspection is crucial because many times the homeowner who is in financial difficulties will often fail to perform necessary maintenance and repairs to the home. These problems become yours as the buyer if not discovered and remedied during the inspection process. Also, the time period waiting for a decision from the homeowners lender as to whether they will accept your offer can take months and you need to verify whether your financing will still be available if the process drags on for too long.
Whether considering a short sale as a homeowner or a buyer, the attorneys at Cramer & Anderson are prepared to guide you through one of most important financial decisions a person can make – whether to sell or purchase a home.
For more information, please contact one of our real estate attorneys:
