3 Things To Remember in Short Sales

Get everything in writing. You have to make sure that if the lender agrees with a short sale that you are absolved of all debts to them. If they don’t, then there’s a chance they can still come after you for the difference if you don’t have all your t’s crossed and your i’s dotted.

Ensure correct reporting to your credit bureaus. Double check with the lender as to how they will report the satisfaction of the debt. Most of the time they will simply report that the debt was satisfied, but sometimes they report that the debt was settled for less than the full balance. That settled for less than the full balance would hurt but it hurts less than a foreclosure (but more than a satisfied without mention of the deficiency).

Review tax ramifications. The lender could claim the deficiency as income they paid out to you, so it reduces their taxes but increases yours… unless you fit into one of two conditions. The first is if you’re truly insolvent, then you’re okay. The second is if the loan was a non-recourse loan.