How To Get Started With Short Sales
- 1). Consult your CPA, tax preparer, or a real estate attorney to learn your state's laws for deficiency judgments and debt discharge income, or DDI. Some states ban lenders from coming after you for the difference between their net gain from a short sale and the amount you owed them. You will probably receive a Form 1099-C, taxing you on the DDI afterward. So find out whether you'll have to pay on that amount, or whether there are any insolvency laws that might protect you.
- 2). Find a real estate agent who is experienced in short sales. Not all agents have dealt successfully with the process. Find one who knows how to list and negotiate short sale properties with the lender, not just one who has successfully put buyers into short sale properties.
- 3). Gather all paperwork requested by the lender as soon as possible. Send all information at one time to the lender via email or fax, and maintain a log of each call, including time, representatives' names and details of conversation. Prepare to show the lender income documents, list of expenses, profit-and-loss statements, income tax information and proof of financial hardship.
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