By David Halpern, Louisville Short Sale Expert, (502) 664-7827 or 895-3100

A short sale enables the “underwater” seller to sell their house even if more is owed than the house is worth. The lender usually forgives the shortfall so the both the seller and the lender can move on. The lender usually pays all of the sellers closing costs and Realtor commissions so the seller doesn’t have to bring any money to closing.

It is vital that the seller bring in a Realtor who specializes in short sales. There is too much at risk to work with a Realtor who is not highly trained and fully committed to performing short sales for their clients. A professional short sale Realtor will also advise which questions are best answered by an attorney or tax professional.

Here are just some of the issues that the Realtor must know about short sales:

  1. HAMP – loan modifications and their relationship to short sales
  2. HAFA – getting the foreclosing lender to pay the seller $3,000 to do a short sale
  3. FHA – special requirements that FHA imposes on the short sale seller
  4. VA – special requirements that FHA imposes on the short sale seller
  5. FNMA – yes, FNMA has their own rules and regs, too. What are they?
  6. One mortgage or two mortgages? What is the impact?
  7. Getting the foreclosing lender to pay all the seller’s closing costs and commissions so the seller will have no out of pocket costs
  8. Selling even if there are large IRS or state tax liens against the property
  9. Deficiency judgments
  10. Divorce issues
  11. Short sale PRIOR to bankruptcy, chapter 7 or chapter 13
  12. Short sale DURING bankruptcy, chapter 7 or chapter 13
  13. Short sale AFTER bankruptcy, chapter 7 or chapter 13
  14. What if the seller has savings? Liquid, 401(k), retirement accounts, college funds.
  15. Tax consequences of a short sale and available exemptions, the 1099-c, HR 3648, the insolvency rule.
  16. Life after short sale vs. life after foreclosure or bankruptcy

These questions are actually just a sample of issues surrounding a short sale. Your Realtor must know the answer to all these questions. Your Realtor must know that these and other questions even exist.

Of course, sellers should ask an attorney and a tax advisor how they would be impacted by a short sale vs. foreclosure vs. bankruptcy. Please keep in mind, an attorney or CPA are not necessarily real estate and short sale experts. Their answers in the area of law and taxes should be respected, but the seller should always consult with a short sale Realtor.

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