RSS FeedOne of my favorite activities as a leader in my own law firm is to take time and answer questions over at LawQA. These questions come to me in an email and I respond with short answers most of the time. This one though, caught my attention because just yesterday my partner John Greifendorff and I sat down with a couple of real estate professionals and discussed the benefits of a short sale after bankruptcy.
I’ll have to admit that in a prior article, Don’t Get Stung in a Short Sale, I was of the opinion that a short sale would not serve a consumer at all. There are still warning signs to look out for, but I can now see that a short sale may not only benefit the consumer who eventually wants to buy another home later, it may also help our economy recover faster.
So the question in the title of this article asks which direction should the homeowner take after their bankruptcy case. Generally, I would answer that it doesn’t matter because your legal obligation to pay your debts has already been discharged and you would incur no tax consequences from any of the choices above. However, I will now add that if you want to buy a home again and re-enter the real estate market, you want to consider your options more closely.
I suggest you take some positive steps this way:
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Continue to maintain your home within reason and only using your own “sweat equity” by keeping the grounds and not otherwise destroying the property before you leave;
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Work with qualified, established negotiators to guide you through this short sale process. It is an added bonus, if they work closely with a law firm to review your short sale papers so that the transaction will leave you with no surprises after the close of the sale;
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Ask for “Cash for Keys” or some other incentive to leave at the end and show your good faith by leaving the house in a well cared for condition .
I can now see that a short sale after bankruptcy can be beneficial to the consumer by shortening the time for them to re-enter the real estate market. We know the benefits to the lender are the savings to them because foreclosure is a costly process; and the economic recovery process occurs more quickly when we can help families become homeowners again sooner. Besides who else is going to buy all this real estate that the banks are holding? If you need a referral to a trusted short sale professional, give me a call; I’ll be glad to help.
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