Real estate short sales are one of the most complicated and drawn out sales for homeowners, but they have become increasingly prevalent in the current real estate market. Anyone who bought a home in the early 2000’s understands exactly how the market has bottomed out. Real estate hit record highs in 2006 and home prices soared to unbelievable prices. Once the market turned around, the homes quickly lost value and homeowners were left paying loans of up to double of what their property was worth.

A short sale, in simple terms, is selling your home for less than what is owed to the bank. Since the bank or mortgage company will not be paid in full for the home, they get a say in the sales price and conditions of the sale. Not only does the bank get involved, but some banks forbid short sales, leaving those homeowners the only option of foreclosure or paying down the mortgage over a matter of years. Each bank has the right to accept or deny a short sale and they will often base their decision on whatever makes the most financial sense for them. One of the biggest misconceptions of a short sale is that the homeowners are in danger of foreclosure or pre-foreclosure. Sometimes homeowners are on-time on the mortgage payments but just need to relocate or sell the home.

When considering selling your property as a short sale, you should contact three knowledgeable professionals; a real estate attorney, an accountant and a real estate professional. An attorney can educate you on the legal ramifications of a short sale, an accountant will discuss the potential consequences with your taxes and an Aurora real estate agent agent can help walk you through the short sale process. While an accountant will be able to go over your specific situation, reading through the Mortgage Forgiveness Debt Relief Act of 2007 will give you an idea of what to expect. This act states that the IRS could pursue the homeowner for the difference between the amount paid off on the mortgage and the amount owed. They could tax this amount as income, and in most states it is considered a “deficiency.”

Now begins the actual short sale process. The first thing you should do is call your lender. It’s important that you keep them aware of the process and you will want to find the person in charge of short sales.

About PorchLight Real Estate: PorchLight Real Estate Group has the most experienced and knowledgeable Denver real estate agents in Colorado. For more information about homes for sale in Denver CO or specific neighborhood homes please visit www.porchlightgroup.com.

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