What is a SHORT SALE?

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The easiest definition of a short sale is when a homeowner owes more money on a property than the home can be sold for in today's market. This situation arises when a homeowner decides they can no longer afford to make payments, but want to avoid foreclosure. One thing to remember is that a short sale is a mutual concept; both the homeowner and the mortgage company have to be in agreement about the situation.

When a homeowner is facing a difficult financial situation involving their home, foreclosure does not always have to be the only answer. An experienced Realtor can help a homeowner figure out whether or not they should pursue a short sale.

Short Sales should not be automatically seen as a "good" option. There are things that need to be carefully considered. These include:

• A short sale requires a lot of paperwork and communication with the mortgage lending company.
• Short sales do affect your credit. Some experts say your FICO score can be dinged as much as 200-300 points.
• After a short sale you may not be able to qualify for a home loan at a good interest rate for months, maybe even years.

If possible, continuing to make current or late payments may help your credit score not be as adversely affected. Check with your lender to see what options you may have.

Finding a Realtor who is knowledgeable about short sales can prove to be extremely beneficial. They may know how to communicate more effectively with the lender, how to properly market your short sale property and how the offer and sale process should work.

In dealing with any situation where your financial well-being must be considered, it is advisable to seek legal and tax advice.