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Short Sale Overview

A short sale is when you sell your house for a price that is less than (short of) what you owe on the mortgage. The mortgage holder must agree to accept the lower amount as payoff. In most cases, mortgage holders want to see evidence that you have some hardship preventing you from staying in the house and paying the mortgage.

There are potential credit, tax, and legal consequences associated with a short sale. We outline some of them on the What to Watch Out For pages, but to really understand what a short sale would mean for you, you need a one-on-one personalized consultation with an experienced professional. Which is what you'll get with the Underwater Homeowners Assessment and Action Plan.

    A short sale might be right for you if:
  • You're underwater but you either can't afford your mortgage payment anymore and/or have to move (as for a job)
  • You can pay your mortgage today, but only by borrowing from your financial future (as in tapping your retirement accounts and/or kids college funds)
  • You are so far underwater that it will take many years just to get back to even
But you won't really know what's right for you until you get the Underwater Homeowners Assessment and Action Plan .

Short Sale Pros

  • Done right, a short sale prevents a future deficiency judgment (note we said done right; see What to Watch Out For -- Deficiency )
  • A short sale typically has a less negative impact on your credit score than a foreclosure does (see What to Watch Out For -- Credit Score )
  • Typically, the path back to homeownership is shorter after a short sale (about 3 years) than a foreclosure (5-7 years)

Short Sale Cons

  • Depending on who holds your mortgage, the short sale process may be extremely difficult to navigate
  • A successful short sale still hinges on you selling your house. In many high-end home areas even homes priced at fair market value can sit on the market for a year
  • If you can afford to pay your mortgage, it can be difficult to get the mortgage holder to accept the short sale (unless you offer to contribute some cash -- not even the whole deficiency)

Is a short sale the right decision for you? You won't know until you sit down one-on-one with an experienced professional to evaluate your unique circumstances.

Short Sale Resources

Homeowner 101 Authorized Short Sale Providers

  • Lawyers Financial Group -- Homeowner 101 authorized provider of short sale negotiation and related legal services. Lawyers Financial Group is a professional real estate solutions provider that can assist you in getting out from under your crushing debt to the banks. They provide an aggressive and leading edge systematic approach to financial planning, short sale negotiations, credit restoration and real estate purchases and sales.

Short Sales in the News

Other Short Sale Resources

  • Arizona Department of Real Estate short sale advisory
  • Other Short Sale Resources
  • Get more resources

What is a Short Sale?

What is a short sale? In this video, financial and real estate experts answer the question and explain how to short sale, why short sale, and the ins and outs of selling short for homeowners with an underwater mortgage. In this case, what you don't know can hurt you. For example, did you know that short sales are a contract law issue and that anti-deficiency laws don't apply? Did you know that you could be trapped still owing the bank without the right letter of debt release? Learn short sale how to in this short video by Homeowner 101.

Short Sale Credit Score: What Underwater Homeowners Need to Know

Get expert advice on short sale credit plus foreclosure and credit. What do homeowners with an upside down house need to know. If you sell short or mortgage default, when can you buy a home again? Learn whether a short sale v. foreclosure is worse for your credit. Understand the difference between a credit score and credit profile, and learn how your credit score affects you.

Debt Forgiveness and Short Sale Tax Issues: What You Need to Know

What is a 1099 c? If you get a cancellation of debt after a short sale, what does that mean? Will you owe a big IRS debt? Does the Debt Relief Act protect all homeowners from short sale tax? Learn from a tax and financial expert everything you need to know about debt forgiveness and short sale tax issues. Understand what is a 1099 c and when you might face a short sale tax consequence. Homeowners, get your A.I.R. (Answers, Information, Resources) because what you don't know can hurt you come April 15.

Watch other videos

Take Action

In many cases, a short sale can be the right option for underwater homeowners. But not in every case. And remember, just because your neighbor did a short sale and it worked out great doesn't mean it's the right decision for you. The right action for you to take depends on your unique financial circumstances. So take action today to get an understanding of where you're at and how best to get back to the place where homeownership is once again a source of financial stability and peace of mind.

Learn more about the Underwater Homeowners Assessment and Action Plan

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