Short Sales of Real Estate Lawyer in Flint

What Is Asset Protection And How Does It Work In A Short Sale Transaction?

In a short sale, a property is sold when a seller has negative equity in the transaction. We can help clients negotiate with their lender/bank the payoff or waiver of the deficiency balance on the loan thereby protecting the client’s current assets and avoid a future collection by a creditor.

At CFlegal, PC., our attorneys can assist you with protecting your assets and as part of that protection, assisting in the negotiations with your lender regarding the sale of real estate. Call us at (810) 292-3115 today to discuss your case with a member of our firm.

Real Estate Short Sale Example

With short sales, a buyer would purchase the property from the lender directly at a discount on the mortgage, in order for the lender to avoid possible foreclosure proceedings or bankruptcy. 

For example, let's say we have a homeowner with an existing mortgage of $260,000.

• Net Sales Price: $250,000.00
• Mortgage Loan 1: $260,000.00
• Mortgage Loan 2: $40,000.00
• Closing Costs: $20,000.00

We can negotiate with lender #1 to discharge its mortgage for receipt of a certain sum with a waiver the $10,000.00 deficiency balance. The Lender for Mortgage #1 will usually pay a nominal sum to Lender #2 to discharge its Mortgage #2. The deficiency on Mortgage #2 then has to be negotiated or if not negotiated it is open for a collection against you, if not charged off by the creditor.

If you do not have an attorney, you may not understand the complex legalities of this transaction. You can be sued years after the short sale is completed on the deficiency balance by a collection agency. It may cause you to file a bankruptcy to protect yourself.

You may be liable to the IRS for the waiver of the debt. Your realtor may not understand what a deficiency is and the realtor will get paid a discounted rate whether you negotiate the deficiency or not. Further, the bank may commence with the foreclosure sale if you do not retain an attorney to have the foreclosure sale adjourned, allowing you time to find a buyer and complete a short sale.