Keeping up with mortgage payments can be hard especially when you encounter sudden financial misfortunes. There are two alternatives that homeowners can take when faced with such dilemma: let the bank foreclose the property or sell it for reduced price. For many, a foreclosure is not an attractive option since it can reflect on the credit record of an individual for 7 years or more. A property sold less than the existing mortgage balance on the other hand can entitle the seller to purchase another home within a period of 2 years. In a Short Sale, the lender can either shoulder the financial loss from any unpaid balance or deficiency or give the borrower additional time to repay his/ her obligations. Overall, the payment arrangements will depend on what was agreed upon by both parties. Once the bank or lender agrees to short sell a property, one of the ramifications that the borrower has to look out for is the tax to be paid to the IRS from such transactions.

People who are contemplating to sell their property for a loss should first confirm if their lender would agree on such arrangement. Make sure to prepare a financial statement detailing your bank accounts. This would support your claims that you no longer have the means to pay back your loans. Those who are making a Short Sale San Diego must hire a real estate broker to facilitate the process. These professionals will sign the “Broker Authorization” form that is usually sent to lenders along with the borrower’s social security number and loan number. Other documents to prepare are recent tax returns, and pay stubs. Then, the lender will request an appraisal to estimate the value of the property before it is put up for sale.