Short Sale? Is it Worth it?

As a Real Estate Agent in today's economy I get this question asked a lot of me. My answer is always the same .....it depends. Can you make the mortgage payments on your home? Are you on time? Do you owe more than the home is worth? If you do not short sale are you going to lose your home to foreclosure? If you cannot make the payments on time anymore and you owe more than the home is worth and you are trying to stay off foreclosure then I say short sale may be for you.

The problem I run into today is the amount of mis-information out there regarding short sale and the possible ramifications that can come out of it. I talked with a young family the other night who had advice from several different family memebers and friends who are not in the business...and guess what; ALL of the information was wrong.

I have some general rules of thumb I follow whenever I am seriously discussing listing a home for a short sale. First, and foremost is "Can you make the monthly mortgage payments on time without not paying anyone else?" If they answer yes then i tell them you are not a candidate for a short sale. A lot of people are under the impression that just because they owe more than their home is worth they can short sale and are relieved of their financial obligations to the home. That is so untrue in many levels. You need to show the bank you have a hardship and in addition you must produce bank statements and pay stubs to substantiate your hardship.

If there is a legitimate hardship I will then proceed to find out what they owe and what the market value of the home is. I have run across some potential sellers saying that they have to short sale when in actuality they can sell the home and break even or even make a little money on it. Why? because as we all know you can sell the home for less than market value and sell it a lot faster...But are we doing our clients justice by not telling them the options?

Last I ask them if they have consulted with an attorney and a tax accountant yet. If not I give them a list of three that will speak to them at NO CHARGE and explain the legal and possible tax ramifications to a short sale.

Once the client has done all of that i will then agree to take the listing and help market the home and get it sold for them. Now, a lot of agents are saying that is a lot of work. However; we have a ethical obligation to serve the best interests of our clients.... And I personally plan on serving them for life.