By now, you have probably heard about short sales, but maybe you didn't know quite what they were or didn't think they were any different than foreclosures.  It might be time to take a second look. A short sale may in fact be the answer you are looking for.**

What is a Short Sale?

A short sale allows a borrower to sell the home for less than the total amount due on the mortgage loan secured by the home. It helps the borrower avoid foreclosure and reduces some of the lender's loss by avoiding or minimizing foreclosure activities. A short sale is best described at as a cooperative process rather than a legal resolution.

What are the Pros and Cons of a Short Sale?

There are many benefits to committing to a short sale. The most attractive benefit is that you can avoid a lengthy and stressful foreclosure process. You, as the seller, have much more control than you would if you were forced to foreclose on your home. If you talk to your short sale field representative, you may even find you are eligible for a seller incentive. Also, the Short Payoff (SPO) can help preserve the neighborhood's market values and reputation.

Doing a short sale now will benefit you in the future. With a foreclosure, it will take 5-7 years to qualify for a mortgage again, but a seller may apply for a mortgage in as little as 2 years with a short payoff. Along with the financial benefits, simply avoiding the stigma of a foreclosure is reason enough to explore your options with a short sale.

There are, of course, some disadvantages to a short sale as well. There is a potential tax liability, a seller may be asked to sign a promissory note or contribute to the loss, and because the process does not begin until the offer is received, it can be a time-consuming process. When making an offer, the buyer must qualify, an appraisal must be done, the offer must meet the current market value and the mortgage investor must approve each offer.

**Please make sure to contact an accountant and an attorney before considering a short sale as an option.