When you have a home that is mortgaged at an amount that is higher than the amount you can sell the home for, you have 3 choices:
Sell and pay the difference.
Sell and owe the difference.
Have your lender(s) agree to take the loss, then sell (This is known as a Short Sale)
If option 1 and 2 are not viable, then we can probably arrange for the last option.
WARNING- DO NOT LET SOMEONE INEXPERIENCED IN SHORT SALES HANDLE YOUR SHORT SALE THESE ARE SOME OF THE NIGHTMARES THAT CAN BE CREATED BY SOMEONE INEXPERIENCED IN THESE MATTERS:
BEING TAXED ON THE AMOUNT YOU ARE SHORT- Unfortunately there are agents who are ignorant of the fact that you should talk to a CPA before deciding to perform a Short Sale. We direct you to investigate your tax situation so that you will be aware of the ramifications in YOUR situation.
BEING FORECLOSED UPON BEFORE THE SALE- Unfortunately there are agents who are ignorant of the fact that they need to talk to your lender about more than just approving the short sale. This mistake is even made by agents who have performed several short sales and have gotten "lucky" and never knew that one more day, and the sheriff would have removed their client. In most cases the department of your lender that handles the short sale is normally separate from the department that handles the foreclosure, both departments need to be kept in the loop.
HAVING THE LENDER REPORT WHATEVER THEY WANT TO THE CREDIT COMPANIES- Unfortunately there are agents who are ignorant of the fact that how the sale is reported to the credit companies is completely negotiable. Although the lender will not report as "paid in full", there are several options that are negotiable that can shorten the time you can buy a home again from 13 years to just 3.
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How to Sell a House When You Owe more Than It Is Worth