What Are Short Sales?

By Money Talks News

Aug 29, 2008 12:00 pm

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The nation’s ongoing housing crisis has many would-be homeowners looking for the bargain of a lifetime. One way of buying cheap is foreclosures… another is with a short sale. But what is a short-sale and how does it work?

A short sale is potential solution for a homeowner that is in financial distress, that would allow them to sell their home for less than the balance of the mortgage.

Sounds almost too good to be true, but there is a catch… it’s much more difficult to do than you might expect. Dan Humbert, a Real Estate Attorney, helped us understand why the infomercials you might’ve seen can be misleading…

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  • Walt
    Short Sales can trigger a 1099 from your mortgage copany or bank (banks are required by Federal Law to send you a 1099) for the difference between what you get and what you owed. It can cost you major $$$ and guess what? The IRS will go after all you own whereas if you simply allow your property to go into foreclosure, you won't have the tax implication. Better think twice before going into a short sale.
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