Short Sales: Why you should use an attorney.

A short sale is a real estate transaction in which a homeowner sells their property for an amount that is less than the outstanding mortgage balance. This type of sale is typically pursued when the homeowner is facing financial hardship and is unable to continue making mortgage payments, but the value of the property has declined, and they owe more on the mortgage than the property is currently worth. Short sales are often used as an alternative to foreclosure, allowing the homeowner to avoid the negative credit consequences of a foreclosure.

Here's why you should consider using an attorney when involved in a short sale:

1. Legal Expertise: Short sales involve complex legal and financial processes. An attorney with experience in real estate law can guide you through the intricate legal requirements, ensuring that all necessary documents are properly prepared and submitted.

2. Negotiation: A skilled attorney can negotiate with the lender on your behalf to secure the best possible terms for the short sale. This includes negotiating the sale price, the release of any deficiency balance, and potential tax implications.

3. Mitigation of Deficiency: In a short sale, there might be a deficiency balance— the difference between the sale price and the outstanding mortgage balance. An attorney can negotiate with the lender to potentially minimize or eliminate this deficiency, which could otherwise result in a debt obligation for you.

4. Lender Approval: Lenders often have specific procedures and requirements for approving short sales. An attorney can navigate these requirements, help you gather the necessary documentation, and ensure that all paperwork is correctly submitted to increase the chances of a successful sale.

5. Legal Protection: Short sales involve legal contracts and agreements. Having an attorney review these documents can protect your interests and ensure that your rights are upheld throughout the process.

6. Liability and Disclosure: An attorney can advise you on your legal responsibilities for disclosing property conditions to potential buyers. Ensuring proper disclosure can help you avoid future legal issues.

7. Coordination: Short sales can involve multiple parties, including the homeowner, the lender, real estate agents, and potential buyers. An attorney can help coordinate and communicate with all parties involved, streamlining the process.

8. Understanding Tax Implications: Short sales can have tax implications, including potential forgiveness of debt income. An attorney can provide guidance on these implications and help you understand the potential tax consequences.

9. Navigating Challenges: Short sales can encounter various challenges, such as negotiation delays, title issues, or disputes between parties. An attorney can help you navigate these challenges and find solutions to move the process forward.

10. Personalized Advice: Every short sale situation is unique. An attorney can provide personalized advice based on your specific circumstances and local laws, ensuring you make informed decisions.

While involving an attorney in a short sale can come with legal fees, the benefits in terms of legal protection, negotiation expertise, and the potential to achieve more favorable outcomes often outweigh the costs. When selecting an attorney, look for someone with experience in real estate law, particularly in short sales, and consider seeking referrals or reading reviews to find a reliable and knowledgeable professional.