It happens all the time. The new thing is short sales, where you actively ask the bank to make a reduction. They don't have to do it nor should you expect them to if the owner has lots of assets.
A short sale should not be taken lightly. It will affect your credit and it could affect your taxes. You will have to claim hardship with the bank and work through their system. You'll need to walk away with nothing or they won't let you do it. If you are considering this be sure to get good advice, there are a lot of people who want to "help" you and end up owning your home.
Keller Williams Partners SW
Very Simply the answer is YES! The process is called a Short Sale. And on the back of a Short sale is who is responsible for the taxes. According to dsnews.com, President Obamaâ€™s 2013 budget proposal includes an extension of the Mortgage Forgiveness Debt Relief Act of 2007, the proposed extension is tenatively until January 1, 2015.
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Coral Shores Realty
Yes, you absolutely can sell for less than what is owed to the bank, if it'sdone the right way.
There are many components to a successful short sale, with the main ones being:
1) Seller's hardship (hardship letter is prepared and financial forms reflect insolvency), something
to be discussed with your CPA
2) Successful marketing, sale, short sale negotiation (preferably with an experienced negotiator or CDPE realtor (CDPE is Certified Distressed Property Expert designation) - so that you get a waiver of deficiency from the short sale lender along with the approval of your short sale
I'd love to go over it in detail with you,
Beachfront Realty, Inc.
Communication with the lender is the key to be successful in a short sale.
My service is FREE and I'll be glad to help any homeowner in distress.
Maria C Esquibel
Certified Distressed Property Expert
Property Expo Realty
West Palm Beach, Florida
Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states
It is a possibility - but you have to show serious financial hardship. You cannot simply say "I don't want to pay this anymore." You have to justify the process to the bank by showing them that you simply do not have the money to make payments anymore, due to a set of circumstancs beyond your control.
I would recommend you reach out to a short sale / reo expert - not just an every day agent. Short sales and distressed property is quite a bit different then your average resale, and most agents are ill-prepared to handle them correctly.
I would also recommend you consult a good lawyer, as there are some possible downfalls involved there. For example - just because you agree to sell the house for less then you owe - does not automatically absolve you of ALL responsibility to the bank. There are certain things in certain situations the bank can come back at you for.
All in all - short sale is an option - but I would consider it as a last option. Especailly these days - you're seeing a lot of programs popping up to help people avoid foreclosure, and avoid flooding the market with these properties. It's really not a good situation for anyone. You - the bank - other homeowners in the area. All potentially face some difficulties because of these situations.
This is call a short sale (sold up short) there is a deficent of equaity. You would need to call your Bank . You need to ask for the Mitigation dept. Do not speak to any one else but them.They will work with the borrow.If I were you I wouild work with a quailfied real estate agent.who can do all the work for you. The bank will pay the commission for you on that also,Thats if you can get the bank to do a short sale.
You will have to show that you are insolveny in order not to pay taxes on the money that was forgivin.the balance of the loan not paid may be considered income so plead insolvent.
I am a Real Estate Professional in Staten Island NY. So I know what I'm telling you is correct. Note!
The higher the loan amount the more likely they are willing to do it.
I would be happy to help you with more questions.
I wrote a four part blog on this. http://activerain.com/blogsview/125091/How-The-Foreclosure-Process
Local Laws may vary. I would also discuss with a good Realtor.
A Short Sale can be done if the lender cooperates.
Check with your accountant. The difference between what you owed and what the bank is considered income to you and you will have to add that to you tax return. President Bush had talked about removing this tax burden but I am not sure where that stands.
If you would like more information, go to my website, and click on REO's and Foreclosures. It explains it from a buyer's standpoint, but I'll be happy to explain to you how we can list and market your property as a short sale if you'd like to call me at 786-205-1133.