Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale

You always thought that over time your home would be worth it’s weight in gold  right?   Well,  maybe not exactly.   Now you are feeling like you are paying for a bottomless pit.   Many homeowners are considering alternatives to paying for their ‘non performing asset’ and Short Selling seems to have become the option of choice.

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There are a number of other reasons you may need to consider the short sale option too.  Health, Job loss, divorce, relocation or a mortgage reset are hardships that your mortgage lender will agree are reason enough to allow a short sale if your assets are outweighed by your heavy mortgage burden.

There is some sunlight shining in your bottomless pit.

Your home is gold and there are miners digging for it right now.   If after consulting with your bank and finding your best option is selling then you will need to consult with the experts.  Your list should include your CPA, attorney and a Realtor experienced in navigating the short sale process.  These professionals will provide advice at little or no expense until the home is sold.

There are pitfalls to selling your home for less than you owe.   Your CPA can determine the tax implications, your Attorney; the legal ramifications and your Realtor will share the market opportunities,  strategies and process.

Al and Erin, homeowners in Sunnyvale, CA., say  “Be cautious in hiring  ’so called’ short sale expiditer companies”.    Al and Erin hired one and learned the hard way that they were sold a load of gold colored rocks.  Not gold.    The company they hired took a fee at the front end and had no motivation to complete the process.  They already earned money.

Consulting with your team of professionals will save time and money.  Your mortgage lender will consider a short sale more readily when confronted with the alternatives this team will present to them and you will not be burdened with undo out of pocket expense.

Buying a short sale is like being a miner…A miner will dig and dig, for months, until they find gold right?  Buying a short sale can be very much like mining for gold.  You need to have a miner’s mindset and use better tools than the others.

“How many months is this going to take?”   This question is being asked with great regularity… too much really.   The answer…It depends on who has the mine.  Period.  If the Listing agent  (who has the mine or short sale) is not proactive then it doesn’t matter how hard your Realtor works or how high your offer is…you won’t find any gold.

Your Realtor is your mining pick.   They need to know how to qualify the listing agent’s knowledge, experience and ability or, at least, be willing to work to help the listing agent make progress with the bank who is ultimately going to approve the short sale and…shine the light on the gold.

A successful gold miner will have a map of the gold mine and know how to navigate it.   Your Realtor of choice will need to have a good map and understand the best way to navigate their way to the gold and extract it.   This map is developed through representing sellers AND buyers of  short sale properties, understanding all the pitfalls  and the best practices to avoid them.

More and more short sales will be coming to the market and,  the best homes and best buys available, will likely be short sales.   This is the market condition reality for the next year or longer according to Banking industry experts and Real Estate professionals based on market statistics and economic conditions.

The extremely low interest rates are bringing droves of buyers out and multiple offers on the best homes are the norm in San Jose as well as Los Gatos and all around Santa Clara County, for that matter.  Too many miners and not enough mines.  You can avoid having to compete with these buyers if you realize they are overlooking the opportunity in front of them.  The Short Sale properties.    Agents are avoiding them because they think  that most of them will never close.    Ahhaa!    The key!   Find other mines!  Be a good miner and have the sharpest pick!

The Debt Relief act of 2007 has been revised and every Seller considering a short sale better brush up!  Tax  Software has yet to be updated and one needs to get the new form 982 from the IRS or Post Office.  Those extensions are due!!!!

From the official IRS website:

The late-December enactment means that reporting procedures for this law change were not incorporated into tax-preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 982. Similarly, the IRS is now updating its systems and expects to begin accepting electronically-filed returns that include Form 982 by March 3. The paper Form 982 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically, which greatly reduces errors and speeds refunds.

The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. In most cases, eligible homeowners only need to fill out a few lines on Form 982 (specifically, lines 1e, 2 and 10b).

The debt must have been used to buy, build or substantially improve the taxpayer’s principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.

Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. For debt cancelled in 2007, the lender was required to provide this form to the borrower by Jan. 31, 2008. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home ( Box 7).

Note: Legislation enacted in October 2008 extended this relief through 2012. Thus this relief now applies to debt forgiven in calendar years 2007 through 2012.