Legal Question in Real Estate Law in Massachusetts

Re: Short Sale Real Estate

Short sales are a mixed bag... The lender has to approve the short sale and agree to release their lien (mortgage) in exchage for less than the value of the note, effectively taking a loss on the property. The borrower is then give a form 1099 for the difference and may have to pay income taxes on that money. In a short sale situation, I recommend you consult with an attorney to determine what effect this will have on your bottom line. The realtor gets paid either way, so they do not have the incentive to worry about the economic impact.

Re: Short Sale Real Estate

In a short sale, teh buyer pays market price, the lender releases its mortgage and usually writes-off the balance of the loan, the Seller gets a 1099 for the amount loan written-off and pay income tax on that amount.

A short-sale should not be as bad for your credit rating as a foreclosure. I would recommend you contact an attorney to make sure you are protected.

Another alternative is to deed the lender the home in lieu of foreclosure with a provision that the lender does not adversely effect your credit rating. In this case the lender gets the home, can sell it lease it or do with it as it pleases. It is cheaper for the lender than foreclosure.