What are the risks of a short sale for foreclosure avoidance?

A short sale is a foreclosure avoidance option where an individual attempts to sell their home for less than they owe on it, and the lender forgives the remaining debt. While a short sale can provide relief to a homeowner in Virginia from their foreclosure debt, there are risks associated with the option. One risk is that the short sale may not be successful. A lender may reject the offer on the home and foreclosure will still proceed. Additionally, the homeowner may be subject to personal income taxes for the amount of debt that is forgiven. Another risk is that the homeowner’s credit score will be impacted negatively. Both short sales and foreclosures are significant derogatory marks on an individual’s credit report. However, a short sale with a negotiated settlement may be less damaging to their score than a foreclosure. Finally, a short sale may have emotional and mental implications. A homeowner in Virginia may feel significant stress and guilt when undergoing a short sale and facing the possibility of a foreclosure. It is important to understand all of these risks before considering a short sale for foreclosure avoidance.

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What are the risks of a short sale for foreclosure avoidance?

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