Sarasota Short Sale Offer
We recently made a short sale offer on a property that has been on the market for ages and is certainly headed for foreclosure. It is a very small house (625 sq ft) on a large lot. The investor has a $160,000 loan thru GMAC. The investor put money into it figuring on flipping it and then the market turned on him. It is now the smallest and least expensive property in the neighborhood but not at all appealing to the masses due to its size. The listing agent, that we made our offer with has connections to the owner. We have made a $70,000 offer and it is in the short sale approval black hole. The question is...If and whenever this deal goes through, do we need to get a real estate lawyer to act in our behalf or will the real estate agent acting as the transaction broker and the title company be sufficient to protect our interests?
[ Edited by cottage on Date 12/26/2008 ]
I dont know who is telling u that a short sale will only damage credit for 6 months, most of your damage will be done when you stop making payments...and they start the default reporting.
Unfortunately, In this case, you can triple the sales time on the market, because you are talking about an unfinished property.
You need to decide upon your maximum loss that u can bear, seriously...are u talking 10k, 40k, 100k? because i do agree you need to get out of this mortgage as soon as possible. You will need to determine your limits so you can make quick decisions, i do think you should do what you can to pay the mortgage and protect your credit, unless you are absolutely positively sure that you will short sell this.
good luck
"What income?"
Forgiven debt (arising from short sale or foreclosure)is treated as income... taxable income by the IRS.
Some original acquisition indebtedness on your primary residence is exempt from income tax.
What about the bill Bush signed into effect regarding forgiveness of debt on foreclosure related properties, and tax related issues for property.
Quote:On 2008-10-13 23:34, topbro wrote:
What about the bill Bush signed into effect regarding forgiveness of debt on foreclosure related properties, and tax related issues for property.
Does not apply to investment or speculatiive property. The property in question was purchased as a flip.
If the sale results in a deficiency, the lender has two options. Forgive the debt or seek a deficiency judgment. The lender does one or the other.
According to federal law, the lender MUST issue a 1099-C if any debt is forgiven. Even if you put language to the contrary in your offer, that provision is not enforceable.
The legistation you refer to prohibited the IRS from taxing forgiven debt on your primary residence through the end of 2009. The legislation did not tell the lenders to quit issuing 1099s, just told the IRS that certain people who receive a 1099-C will not have a tax impact.
If any Investment property or second home debt, home equity credit line debt, or debt from a cash out refinance is forgiven, then the forgiven debt is still taxed as ordinary income.
That bill frees you of the liability of tax from the short sale, but I HEARD that the bill is only in effect till Jan of 09... The bill is also only for a primary residence, not a 2nd home or an investment... Some say it will be extended because of the current market status, but Im not a Tax Attorney... Anything that anyone writes on this site, or any site, is subject to your state specific laws and regulations... CHECK WITH A TAX PROFESSIONAL IN YOUR AREA...
you can absolutely do a SS when you are not delinquent, and without sacrificing your credit. I do it all the time.
I think JohnnyVegas has the right plan. Also Commercial King above.
Blue, I think you need the face the fact that you have been caught on the wrong side of the housing bust. If you accept that then you have to understand that there is probably no way your credit will come out of this unscathed. So I recommend you try to limit the damage the best you can using some of the suggestions posted. Understand that this (credit preservation) may not be the most important issue for you.
Capital preservation and peace of mind should be a very high priority. If you lose your current source of income you may very well not have another one to replace it. This is not just another recession.
Back on topic, as stated the lender by policy will likely not listen unless you are late. Yes it probably will ding your credit. A foreclosure and/or BK will devastate it for quite a few years. But there are worse things that can happen particularly if you have no rainy day money.
[ Edited by Nuetrino on Date 01/05/2009 ][ Edited by Nuetrino on Date 01/05/2009 ]