My friend (No Really) needs to do a short sale on her home what should she look out for?

Question

My friend (No Really) needs to do a short sale on her home what should she look out for?

Answer 1

She needs to find a really good realtor.  They should be able to tell her all of the pros and cons.  The bank (mortgage company) will be the one to pay the realtor fees, so that shouldn't be an issue.  Plus, the 'short sale' depts won't work with an individual - it needs to be listed through a licensed realtor.

The issue that is kind of up in the air right now is whether or not the banks will issue a 1099 to your friend at the end of the year.  If they do, the IRS views that as income and she will owe tax on that amount - it's the difference between what was owed and what it was sold for.  However, congress just recently passed a law that is in affect for 3 years relieving the homeowners of this financial responsibility.  But, this is all still new - her realtor and the short sale dept of her mortgage company would better be able to explain this for her situation.