Choosing a Short Sale Realtor

Choosing a Realtor to work with when contemplating a short sale can be a daunting task. There is so much information (and mis-information) out there it’s hard to know who to trust and what to think. Here are a few key points and questions to ask when interviewing Realtors for help.

 

What is a short sale and do I have other options?

  • This is a big one! If someone is pushing a short sale on you without knowing all the facts and what your needs are he/she may not be the best choice.
  • The options really depend on many factors. Your current situation will typically dictate which path to take. MakingHomeAffordable.gov is a good place to start looking. For more information Click Here
  • A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property, and the property owner cannot afford to repay the liens’ full amounts, and whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt.Any unpaid balance owed to the creditors is known as a deficiency.

 

Are there tax consequences when short selling a property?

  • When a lender approves a short sale they are forgiving debt. The IRS sees forgiven debt as income. HR 3648 is one exemption but it’s not a blank check. It has helped many people avoid tax liability after a short sale. For more information Click Here
  • It’s imperative you know this upfront so you can prepare in advance and consult with a tax advisor that understands the current tax code pertaining to short sales and debt forgiveness. We can refer you to an excellent tax advisor who specializes in minimizing tax liability for homeowners contemplating a short sale.

 

Can the lender legally pursue a homeowner if the proceeds from the short sale do not pay off the mortgage in full (deficiency judgment)?

  • No, not in California. In July of 2011 Senate Bill 458 was approved by our Governor. It prohibits a deficiency judgment under a note secured by a first deed of trust for a dwelling of not more than 4 units in any case in which the trustor or mortgagor sells the dwelling for less than the remaining amount of the indebtedness due at the time of sale with the written consent of the holder of the deed of trust or mortgage. For more information Click Here

What is the deal with all these banks paying owners $2,500-$35,000 in relocation assistance at the close of the short sale?

  • Not every bank participates in these programs but it is imperative you have a Realtor that at least knows this money is available. Through HAFA (Home Affordable Foreclosure Alternative) and some of the proprietary short sale programs some banks are offering qualified homeowners thousands of dollars in relocation assistance when a short sale successfully closes. For more information Click Here

 

Does it matter if the current loan(s) were used to purchase the property or if I refinanced and cashed-out?

  • Every situation is unique. It’s imperative that you speak with a tax advisor and possibly even a real estate attorney in detail about your specific situation. If your current loan(s) was used to purchase the property it’s considered non-recourse debt by the IRS. Meaning you may not be personally liable. However, if the loan(s) was refinanced the loan becomes recourse and you may be personally liable. For more information on recourse and non-recourse debt Click Here.
  • As mentioned above it is IMPERATIVE that you consult with a tax advisor and real estate attorney on your options.

 

We would be happy to meet in person or speak on the phone in more detail about all of your options…not just short sale. We understand it’s hard to know who to trust. We want to earn that trust one conversation at a time.

 

Dustin Wise – Realtor

“The Wise Team”

Keller Williams Realty

(714)698-9473 cell/text

Dustin@TheWiseTeamOC.com

 

*We are not tax specialists or attorneys. This information is not meant to be used as legal or tax advice. Please consult with a licensed tax specialist and/or attorney. 

Advertisements
Post a comment or leave a trackback: Trackback URL.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: