Black and Buono Blog

...by Kiley Black

There are many people across Framingham, Marlborough, Worcester and Natick that think they cannot sell their homes because they owe more than their house is worth. This is called a short sale. You may also hear it referred to as “being underwater”. Many people think they can’t sell their home because the house prices are dropping in their town.

You are not alone in this situation. Due to the downturn in the housing market, there are many home owners who have found themselves in the same situation. The most vulnerable are those who bought their homes within the last five years or so and now need to sell either because of a life change or a financial problem. Home prices in many cities and towns across Massachusetts are much lower than they were at the peak of the market, and there are associated costs to selling your home.

Much of the time, your lender will want proof that you cannot sell the house for the amount that you currently owe on the property. The lender may require that you list your house for some amount of time, usually 90 days, before they will consider a short sale or reworking the terms of the note. Mainly, the bank is trying to minimize their loss and assess their risk in re-establishing a new loan for the new buyer.

You should first talk to your lender or bank to see what they require for a short sale. Get everything you can in writing.  A real estate attorney can help you with the process. You will need an attorney when the bank is ready or working on accepting the offer.

You most certainly need a realtor to give you a fair market value for your home and then list your home based on the bank requirements.

Short sales can take a lot of time. The negotiation could take months. If you are selling your home as a short sale, you may have a tax liability equal to the difference between your loan balance and today's market value. The debt may or may not be forgiven by the lender, depending on your assets and financial status. This is another reason you should have a real estate attorney involved; you certainly don’t want any surprises after the fact.