By now, we all have a basic understanding of what a Short Sale on your home is.  Basically, it is when your mortgage loan amount is higher than what your homes value is.  In other words, you are upside down on your home, like you might be on your automobile loan. 

So, what happens if you need to sell your Primary Residence?  Just becuase you want to sell your home, that alone does not qualify you for a short sale.  If you want to do so, you would need to have cash on hand to make up the shortfall in order to close on your home.  Many people are not in that financial position. 

There are several reasons your lender would allow you to sell you home.  If you are in financial distress.  Banks define that as one of the following:  Divorce, Death, Job Loss, Job Transfer, Incarceration, Major reduction in salary, Mortgage Adjustment, and even long term illness can be considered.

Now lets compare a Short Sale to a Foreclosure. 

        A Short Sale is less of a hit on your credit rating, as little as 50 points off of your score and only affects it for 2 years. In addition, a the diffenciency (negative difference) in most cases is foregiven by the lending institution.  At this point you would not have to claim that loss as income on your tax return.  That will eventually expire.  

        A Foreclosure on the other hand will haunt you for many years to come.  With a Foreclosure on your credit, you can expect it to remain  there for at least  7 years,  your credit score could take a 200 point hit as well.   Also, you would be responsible for repaying the diffenciency.  This is why many people who have lost their homes through Foreclosure eventuallly end up declaring Bankrupcy.  Their credit is very damaged as well as they now owe a balance on their home they no longer own, many times, $100,000 or more.  Many loan applications also ask you "if you have every had a home foreclosure?" and that one remains with you for life.  No question, a Short Sale approach is a much better path to take than letting your home go into Foreclosure.

As a Realtor, I have gone through comprehensive training and certifications for assisting homeowners in distress.  A couple of my certifications include CDPE (Certified Distressed Property Expert) and SFR ( Short Sale and Foreclosure Recourse), both are highly acclaimed in my industry. 

Should you know anyone who is in distress, please pass my name and number along to them as I would love to speak with them.  Kyle Davis REMAX Select Properties, Inc.  703-801-8460 (mobile) or Kyle@KyleDavisSells.com.