I am a real estate agent with a prospective client in Chap 7 bankruptcy and losing her house which is way over-encumbered. What legal risks, if any, does she face by listing the house and trying to sell it short after the BK clears. Reasons she may be better off with a short sale would be possible cash for keys compensation, shorted negative credit period, and input into the ultimate buyer of the property in a community where she knows many of the neighbors.
1 Answer from Attorneys
1. Few people get "cash for keys" in a short sale. Usually that occurs with a foreclosure.
2. The negative credit period is not shorter, it is 7 years for both foreclosures and short sales. What affect each will have is up to the granter of later credit. The BK is already on her credit for 10 years.
3. Having input on the ultimate buyer is both imaginary (the bank wants the most money it can get) and possibly illegal for her (discrimination) and for you (steering).