The Best Time to Short Sale a House

    In these hard economic times, some home buyers may be experiencing financial woes or facing foreclosure (of which short sale could remedy). Some may not be on that brink yet, but there is a specific timeline to be concerned with in the real estate market: committing to a short sale before December 31, 2012.

    The reason being is because the Mortgage Forgiveness Debt Relief Act will expire at the end of the year. It was designed to help home owners sell their house without remaining in debt, by exempting the sale from taxation – (under tax code, borrowed money doesn’t need to be reported as income because you have an obligation to repay. But if the lender cancels what you owe, the IRS requires you to report the debt as income because the duty to repay no longer exists).

    If you decide to short sale your property after December 31, you’ll have to pay a hefty income tax, which could add more stress to your financial situation. So, if you’ve been on the fence in figuring out how to handle your mortgage payments, a short sale might be the best option at the moment.

    There are other benefits to short selling your house and avoiding foreclosure:

    Benefits of a Short Sale Negatives of a Foreclosure
    • No mortgage payments to make
    • Under Fannie Mae guidelines, you may be eligible to buy another home in 2 years, rather than 7
    • Won’t suffer social stigma of “foreclosure”
    • It won’t detract from your credit rating as much as a foreclosure
    • Losing ownership of your property can be emotionally devastating
    • It will have a severe effect on your credit rating
    • It could cause emotional strain for you and your family
    • Some employers like to have a glance at credit records before hiring, which could detract from your application
    But why should you be in a hurry to do it now, with still a couple months to spare? Well, not all short sale listings sell quickly. The process for doing a short sale could take 45, 60, or even 90 days. And by then, the M.F.D.R. Act will have expired. This is why timing is crucial. Using a qualified agent and talking to your mortgage lender is essential to speeding up the process. Don’t hesitate any longer. Do some research and discover that short selling your house is the best action at the moment.

    Take it from a fellow short seller: “A short sale provides peace of mind. If you’re in foreclosure, you don’t know when they’re ultimately going to take the place away from you.”

    To review your circumstances and start a short sale now, contact a local agent at Keller Williams Realty. Their trained and certified agents will help you put your house on the market for the right price.