What is a short sale?


When a owner is selling their home and it is worth less then what is owed on the property and the mortgage company forgives the difference on what is owed on the property so the property can be sold is a short sale.

Here is an example…

A home owner has a mortgage on their home for $300,000. The home owner receives an offer for $270,000 and the bank agrees to sell the home for $270,000, even though their is a difference of $30,000 of outstanding debt on the property. The bank forgives the $30,000 debt but will usually report to the IRS that the home seller was gifted that amount and will be taxed accordingly. Also, the bank will typically require a licensed appraisal to verify that the home is not worth more then the sales price and also must prove that their is no relationship between seller and buyer.

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