Educational Guide
Understanding Short Sales
When your mortgage balance is higher than your home's market value, a short sale may be the best way to sell the property, avoid foreclosure, and move forward with your life.
Educational Guide
When your mortgage balance is higher than your home's market value, a short sale may be the best way to sell the property, avoid foreclosure, and move forward with your life.
A short sale occurs when a homeowner sells their property for less than the outstanding mortgage balance, with the lender's approval. The lender agrees to accept the reduced sale proceeds as full or partial satisfaction of the debt.
Short sales are different from traditional home sales because they require lender approval at every step. The process is more complex and takes longer, but for many homeowners, it is a far better outcome than foreclosure.
Understanding the differences between a short sale and foreclosure can help you make an informed decision about your future.
| Factor | Short Sale | Foreclosure |
|---|---|---|
| Credit Impact | 50-100 point drop typically | 100-160+ point drop |
| Recovery Time | 2-3 years | 5-7 years |
| Control | You choose buyer and terms | Lender controls the process |
| Public Record | Listed as "settled for less" | Listed as "foreclosure" |
| Deficiency Judgment | Often negotiable to waive | Lender may pursue |
| Future Housing | May qualify in 2-4 years | Typically 5-7 year wait |
Work with an experienced agent who understands the short sale process. Randy Swihart has extensive experience negotiating with lenders and servicers, including Equator, RES.NET, and PyramidPlatform.com.
You will need to provide a hardship letter, financial statements, tax returns, bank statements, and other documentation to support your short sale application. Your agent will help you compile everything the lender requires.
The complete package is submitted to your lender's loss mitigation department. Your agent will follow up regularly to keep the process moving and address any requests for additional information.
The property is listed on the market at a price reflecting its current value. The listing includes disclosure that it is a short sale pending lender approval.
Once a buyer is found, the offer is submitted to the lender for approval. This is where an experienced agent makes all the difference. Negotiations with the lender can take weeks, but a skilled negotiator can often secure favorable terms, including waiver of the deficiency balance.
Generally, you may qualify for a short sale if:
In some cases, forgiven debt from a short sale may be considered taxable income by the IRS. However, under the Mortgage Forgiveness Debt Relief Act and related provisions, there may be exclusions available depending on your circumstances.
We strongly recommend consulting with a tax professional about your specific situation before proceeding with a short sale. This is not legal or tax advice.
30+ years exclusively in REO and short sales. Few agents have this depth of specialized experience.
Both sides of the table. Randy has worked inside banks (WAMU, Chase) and knows exactly what lenders look for.
Licensed Mortgage Broker and Title Agent. This means Randy can guide you through the financial and title aspects of the transaction, not just the real estate side.
Fluent with industry platforms. Equator, RES.NET, and PyramidPlatform.com for efficient processing.
Every situation is different. Let us help you understand your options.
Thank you for reaching out. Randy will review your message and get back to you as soon as possible. For the fastest response, call or text (844) 963-4808.
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