Deficiency Judgements –

A lender could file for a deficiency judgment to demand you pay the difference between the short sale amount and the entire mortgage balance you owe on the property.

Taxable Income –

You could be taxed on the amount forgiven. The IRS views forgiven debt as taxable income.  Only your primary residence is excluded from this tax . See the Mortgage Debt Relief Act of 2007.

Credit Score Damage –

Lenders will report short sales “not paid as agreed” to credit bureaus. This will lower your credit score considerably.

Slow Process –

Short sales requires the lenders approval and can take anywhere from a few weeks to months before even hearing back.