Short Sale FAQ

How long does this take?

The process can take 60-120 days to get a buyer, get approval and get it closed. You can still reside in the property until it closes escrow, and in some cases even rent the home back from the Buyer.

Will the Bank seek to recover the amount of loss?

The lender has sole discretion whether to pursue a deficiency judgment in those instances when the judgment is permitted. In many instances this is not allowed on the 1st position loan for a primary residence. To determine whether a pending foreclosure or short sale is subject to a deficiency judgment, you should talk with a real estate lawyer. Ultimately, your agreement to do a Short Sale is between you and your bank. They will disclose if there is any liability to you.

Are there tax liabilities?

Some banks will issue you a 1099 tax statement according to bank policy and/or current law showing their loss as your gain. In other words, you may be liable for taxes as if you earned the amount the bank lost. In many cases there is already financial hardship and as a result there is little if any tax impact. You will want to check with a tax accountant to determine how that will impact your tax return/payment.

Will this impact your credit or prevent you from buying a home again?

Your credit will reflect a debt settled, and could be there for up to 7-years. However, unlike foreclosure, this will reduce your credit score but will not impact your ability to obtain credit or buy a house again in the future. You will likely NOT be able to do business with the same bank again, however.