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What is a short sale?

Homeowners in Florida may benefit from learning more about a short sale and how the transactions may help eliminate debt one day. Short sales are similar to selling any normal house, except the transaction takes longer to complete because it requires third-party approval. The short sale is used to avoid the consequences of foreclosure. The seller does not make any profit on the sale.

The state of Florida does not require sellers to pay taxes on the amount forgiven. In addition, short sales are taken off the credit report quicker than foreclosures are. Sellers who use the short sale typically owe more to lenders than the home's current value. The owner sells the home and all the proceeds go to the bank or lender. The bank or lender must approve the buyer's offer to complete the transaction.

Some buyers may grow impatient and back out of the sale if the lender takes too long to approve the transaction. Short sales may take as long as six months to complete while others could be finalized in a matter of weeks. Short sales prohibit homeowners from selling the property to family members. Lenders typically agree to short sale transactions because selling for less than current value is still worth more than the costs of foreclosure.

Homeowners who need help with setting up a short sale typically benefit from contacting a real estate lawyer. Legal counsel may be able to help homeowners with negotiating the short sale as well. Negotiating the close of the sale may entail convincing creditors to approve the sale. People who have questions about how a short sale will affect their specific situation my may benefit from speaking with legal counsel as well. Lawyers may also have additional alternatives available to help homeowners avoid filing for foreclosure. It should be noted that this information is general and not meant to be taken as legal advice.

Source: Orlando Sentinel, "Ask the experts: Short Sale", August 14, 2014

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