What is a short sale?

Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party. With this agreement, the lender releases the borrower from the mortgage, thereby preventing foreclosure.

What are the advantages of a short sale?

Minimize damaging impact to credit:  Foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a “settled debt” and is significantly less damaging. With a short sale, your FICO score will not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home much sooner as well.

Minimize financial exposure/liability:  In many foreclosure situations, the lender will ultimately sell the property at a significant discount once they foreclose and repossess the property. The homeowner can then be financially liable to the lender. While the same may be true with a short sale, the difference is with a short sale the homeowner is still involved in the process and can therefore contribute their input and have more control over the sale price of the property and the potential associated liabilities. In a foreclosure, however, once the lender repossesses the property, the homeowner is typically defenseless with respect to what follows next.

How do I qualify for a short sale?
    What criteria must I meet to be considered in a “hardship” situation?

In order to be eligible for a short sale, a homeowner must be able to prove to the lender that they are a victim to a “hardship” and are therefore unable to continue making payments on their mortgage.

A hardship situation is one that is the result of some extenuating circumstance that forced the borrower into a position where they can no longer afford their mortgage payments. While every situation is unique, some common examples of hardship include:

  •   Unemployment or loss of primary income source
  •   Inability to work due to health crisis
  •   Mounting medical expenses
  •   Employment relocation
  •   Failure of business
  •   Bankruptcy
  •   Death of spouse or significant other
  •   Divorce or separation

What do I need to do to get started?

In addition to the homeowner proving hardship, lenders require a specific set of supporting financial documents to consider a short sale.  Contact me today and I  will help you get started today.

When should I begin the short sale process?

As soon as you possibly can.  Foreclosure situations tend to be extremely time sensitive.  The sooner we can begin the negotiations with your lender, the greater the chances of a successful resolution.  There is no need to wait until the lender sends you a notice of default or initiates formal foreclosure proceedings against you.  Time is of the essence!  Please contact us today for a free consultation with one of our specialists.

How much will a short sale cost me?

Absolutely nothing. Unlike loss mitigation companies, I do not charge you personally for my services.  We are only compensated if your lender approves the sale of your home.  We directly negotiate our fees with your lender.

How long does a short sale typically take to complete?


This is definitely not an overnight process.  Every situation is different, but once we have the opportunity to speak we will be able to determine your situation and provide you with an estimate of how long this process will take.


Can the process be expedited if I am imminently facing foreclosure or an auction date
has been set?

Absolutely!  Although every short sale situation is unique and follows its own timeline.  Typically a short sale is completed within one to four months from the time we have a complete short sale package ready to present to the lender.  Having said that, we have successfully negotiated a short sale in as little as two weeks.  Timing depends on how quickly we can begin negotiating with your lender. If you are imminently facing foreclosure or even if an auction date has already been set, the process can certainly be expedited and we have even had lenders postpone the auction date.  Please contact us today for a free consultation with one of our specialists so that we can be of immediate assistance to you.

What effect will a short sale vs. a foreclosure have on my credit?

Foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a “settled debt” and is significantly less damaging.  With a short sale, your FICO score will not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home much sooner as well.

Bert Gor & RE/MAX Professionals Select is not a credit counseling agency, but credit experts say that a foreclosure will typically reduce a borrower’s FICO score by 250 to 280 points and the borrower would usually need to wait more than 36 months before a lender will offer any kind of interest rate that makes sense.   A short sale, on the other hand, will typically only result in an 80 to 100 point hit to the borrower’s credit and a significantly shorter waiting period before buying another home, usually about 18 months or less.

What is my potential liability after completing a short sale?  What is a deficiency judgment?

As with all foreclosures, there are several potential tax and liability considerations when doing a short sale.  With a short sale, however, these potential tax and other liabilities are typically less frequent and less severe.

Tax ramifications:  After completing the short sale your lender may decide to issue you a 1099 for the difference between the price your home sold for and what you owed, and you can later be taxed by the IRS on this amount as income. 

It is important to note that if specific criteria are met, the IRS may release the borrower from this tax liability.  Furthermore, Congress is currently considering legislation that would eliminate this taxation of so-called “income” due to cancellation of debt.

Lender recourse:  In some states and with certain types of loans, lenders can pursue a court decision called a “deficiency judgment” making you personally liable for the remaining amount owed to them above the short sale price. In some cases, the lender may ask you to pay a portion of the difference back in the form of an IOU.

The lender has sole discretion whether to pursue a deficiency judgment in those instances when a deficiency judgment is permitted.  Unlike other loss mitigation companies that offer “basic” and “premium” services, at ALM, as a matter of course, we diligently apply ourselves to every short sale case with the goal of negotiating with the lender to eliminate a deficiency judgment, minimize your tax liability, and to consider your debt as settled.

Why would my lender agree to a short sale?

In most distressed mortgage situations, foreclosure is a last resort for all parties involved.   Simply put, both the homeowner and the lender usually want to avoid foreclosure at all costs.    That is why lenders have come up with various alternatives to foreclosure, which they are typically very motivated to pursue prior to going to foreclosure.

A short sale gives the lender the ability to cut its losses upfront thereby avoiding the expense and time of a foreclosure and potentially greater losses.  Lenders want to make loans, they do not want to be in the business of owning and managing real estate.  Whether the lender chooses to go through with a foreclosure or agree to a short sale, they are taking a loss either way, but in many cases they would take less of a loss with a short sale and resolve the matter in a comparatively shorter time frame.  In nearly every case, a short sale offers a better return on the lender’s investment than a foreclosure does.

What is your relationship with lenders?  Why shouldn’t I negotiate with my lender directly?

Bert Gor works as independent third-party loss mitigator/short sale  Realtor.  It is because of our objectivity and neutrality that homeowners and their lenders can count on us to be an impartial driver of the loss mitigation process.  Bert Gor stands apart from the crowd because we strive to equally serve all parties to the transaction, and affect a win-win outcome for all.

We firmly believe that just as most borrowers use a professional to initially get into a mortgage, it is in their best interest to do so if they are in the unfortunate position that they need to get out of a mortgage.  At best, you only get one shot to negotiate your way out of foreclosure, and while it is certainly possible to negotiate with the lender yourself, it is highly unadvisable.

Most lenders’ loss mitigation departments are understaffed, and the overworked loss mitigators are usually overloaded with all parties vying for their attention.  Unfortunately, the loss mitigator can be very difficult to get a hold of, and when you finally do get through, you have very little time with which to make your case.  Furthermore, the added stress of foreclosure in itself makes it difficult fore a homeowner to effectively and calmly negotiate their way out of foreclosure.

Because we work with all lenders and represent homeowners from all across the country, and since we specialize in loss mitigation, we understand how to collect, prepare, and effectively present the information that lenders require to seriously consider a loss mitigation solution such as a short sale.  We have excellent working relationships with the lenders’ loss mitigation departments and we will leverage our network and expertise to help you solve your problem.  Please contact us today for a free consultation with one of our specialists so that we can be of immediate assistance to you.


What role can an investor have in a short sale?
How can Bert Gor protect me from unscrupulous    investors taking advantage of me?

Investors often play a valuable role in a short sale, in that, in order to successfully complete a short sale an offer must be made on the property that the lender will accept as fair market value.  An investor can step in as a buyer and be the crucial link to making the short sale possible.  Unfortunately, there is no shortage of sharks and vulture investors on the prowl in the foreclosure arena looking to take advantage of distressed homeowners.  Beware of these scammers!

These individuals and companies often market themselves as expert negotiators and loss mitigators when in reality they simply make “lowball” offers on the property that the lender will most likely not accept and that will waste precious time in a very time-sensitive situation, or worse, will lead to the lender foreclosing on you and repossessing your home.  Even on the off-chance that the lender does accept their offer your potential tax liability can be much greater.  By working with Bert Gor you can be assured that you are protected from these unscrupulous investors.   We will only have your property marketed to qualified, serious buyers who are prepared to make fair offers, including our network of pre-screened legitimate investors.

How does filing for bankruptcy impact my ability to do a short sale?

Bert Gor can still help negotiate a short sale with your lender even if you file for bankruptcy protection.  However, in our experience, bankruptcy is usually employed only as a last resort in a foreclosure situation.   Typically, filing for bankruptcy only temporarily delays the foreclosure process (or in legal terminology, it provides a “stay”).   Eventually the property is sold to satisfy debts to creditors.   We strongly urge you to seek the advice of a bankruptcy attorney if you are considering this option.

Can Bert Gor help me with my government backed (or insured) mortgage?

Absolutely!  Bert Gor is experienced in negotiating all kinds of government loans, including FHA or VA owned mortgages and Fannie Mae / Freddie Mac insured mortgages, as well as privately insured mortgages.  We are highly proficient in all of the specific rules and regulations governing the acceptable short payoffs of these mortgages.

Does Bert Gor operate nationwide?

No.  Bert Gor is currently serving the Northern IL market, but has a very large reliable referral network in all 50 states.

Why should I use Bert Gor to help me?

Bert Gor is a leader in the field of short sale negotiating.  Our principals and affiliates have extensive first hand experience in all areas of the mortgage and real estate industries.  Our expertise and experience is what differentiates us, our commitment to our clients is what sets us apart. It is this unique combination of industry-leading expertise, impeccable professionalism, and extraordinary customer focus that enables us to offer the highest level of service to our clients.