The 5 top Myths about Short Sales

1. You should put a quick closing on your contract to get a faster approval.  - False
  Many short sale lenders have more cases then they can handle, and up to100- 600 files per negotiator. Threatening that a buyer will "walk" or that you will pull a contract because of a contract closing date will generally have no effect on getting the lender to respond more quickly.

2. You should send in multiple offers to the short sale lender.  - False
  Most large lenders only want one signed contract.  The more contracts submitted the more likely the case will not be addressed by the lender.

3. You can demand the lender not issue a 1099-C on the cancelled debt.  - False
  The lender is required by law to report the forgiven debt on a short sale as income.  You may not be liable to pay taxes on this debt, however, if you qualify under the IRS insolvency rule or the Mortgage Forgiveness Debt Relief Act. 

4. You can negotiate with the lender to not report the short sale as "settled" to the credit bureaus.  - False
  Again, most large lenders have standard approvals and reporting guidelines they will not vary, even if you hire an attorney.  With a short sale, however, you might be able to borrow again in two years, versus four to seven years with a foreclosure or deed-in-lieu of foreclosure.

5. If your lender knows you are trying to do a short sale, they will stop the foreclosure process.  - False
Lenders cannot rely on a successful short sale transaction or even on a property receiving an offer.  Stopping their collection and foreclosure efforts would weaken their position and potentially cause further financial loss.  You may, however, be able to postpone a foreclosure sale date if you submit a reasonable short sale offer for consideration. Stay away from fancy or tricky tactics, and rely on common sense, you will find your short sales more likely to be a success.