In this constantly changing real estate market people have many questions and the answers to those questions can change over time. Although the following FAQ should prove helpful, there is no substitute for sitting down with an experienced real estate person. Everyone’s situation is different and we believe a tailored personal approach is the best option.

Feel free to contact us with any questions you may have.


What is a short sale?

A short sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds.

A short sale is an alternative to foreclosure and may be an option if:

  • You are ineligible to refinance or modify your mortgage
  • You are facing a long-term hardship
  • You are behind on your mortgage payments
  • You owe more on your home than it’s worth
  • You have not been able to sell your home at a price that covers what you still owe on your mortgage
  • You can no longer afford your home and are ready or need to leave

How do I know if a Short Sale on my property is right for me?

Because of the current market conditions, mortgage lenders are more willing to work with borrowers faced with a financial hardship by agreeing to the short sale process. If you are faced with a hardship and are unable to meet your financial obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through the foreclosure process.

In order to decide if a short sale is right for you, compare key aspects of this option (continuing debt obligations or liability, credit impact, tax impact if any, etc.) with the other options available to you including foreclosure.


I have two loans; can I still do a Short Sale transaction?

Yes. We can work with both lenders to put together a Short Sale transaction packet together. We are usually successful at getting the two lenders to cooperate because neither lender wants to own another home through foreclosure. The HAFA program, mentioned earlier, incentives Lenders and Servicers monetarily to assist in a short sale instead of a foreclosure.


I am concerned about my credit, how will a Short Sale affect my credit?

The most important action you can take to protect your credit in the case of loan default (or likely loan default) is to address the loan issue as quickly as possible. A short sale typically lessens the credit impact to a distressed borrower by addressing the loan default proactively. In addition, borrowers going through a short sale can be eligible to borrow to own a home again in as little as 2 years, whereas this time frame can be as long as 7 years after foreclosure.


If I do a Short Sale, what do I have to pay to sell my home?

In most cases, you will pay literally no sales costs if your lender approves the Short Sale. You may even receive up to $10,000 dollars to assist with moving expenses. Agent commissions, title, escrow fees, and even most repair expenses are effectively paid by the lender as part of the Short Sale approval.

In most cases, the amount the lender reduces the sellers’ payoff is considered to be “forgiveness of debt”. Be sure to understand your ongoing debt obligations, if any, before you close your short sale transaction.

Forgiven debts are often considered taxable income by federal and if applicable, state tax agencies. There is currently favorable tax treatment available for most debt forgiveness related to principal residences.


How do I get started on the Short Sale process?

There are very specific categories that lenders consider “qualified hardships.” A short sale can only take place if both your property and your hardship qualify. Working with our team of experienced real estate professionals will increase the odds of having your lender accept the proposed short sale with your first request. Not all lenders will accept every short sale… experienced transaction management and negotiation is key.

The information, opinions and publications available on our website, blogs and social media channels (John O’Neill Properties, Inc. Sites) are broad guides for general information only. They are solely intended to provide a general understanding of the subject matter and to help you assess whether you need more detailed information.
The material on this website and other John O’Neill Properties, Inc. Sites is not and should not be regarded as legal or financial advice. Users should seek their own legal or financial advice where appropriate. Every effort is made to ensure that the material is accurate and up to date. However, we do not guarantee or warrant the accuracy, completeness, or currency of the information provided.  You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.

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