Home Buying in Las Vegas>Question Details

Dowd, Both Buyer and Seller in Las Vegas, Las Vegas,...

If I am relocating to another state and am going to buy a new house than short sale the other, is that ok?

Asked by Dowd, Las Vegas, Las Vegas, NV Tue Mar 15, 2011

My wife will no longer have a job. Family issues prevent her from working.

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Answers

51
Dowd,
Your question is actually a really good question. Can you short sale a house in one state and buy another house in a different state. Essentially when you short sale a property you sell it for less than the amount of money you owe on it. There are a number of ways to do this of course. You can sell it for less than you owe and pay the difference to the bank at closing. Or you can sell it for less and hope the bank forgives the remainder balance. If you pay the remainder balance to the bank at close, it's probably ok in most people's view to buy a different home in another state. However Dowd, statements included with this question lead me to believe you plan to buy first in a different state then declare hardship, short sale in your present state, and hope the bank forgives the remainder balance. If that is your intent, I think you are comtemplating bank fraud. I think the bank will find out. If that is the plan then it's probably not such a great idea unless you plan to live in prison. I would advise you to forget that plan.
5 votes Thank Flag Link Mon Mar 21, 2011
The doing part isn't a problem, it is the asking the lender to go along with it that may be problematic. Nowadays lenders scrutinize your financial profile from every angle, and if you show on your credit the fact that you already own a house, they (the lender for the new house) will probably want to see that you have more of your money at risk in the purchase -- meaning, you'll probably need a higher down payment.

On the other hand, if the purchase goes without a glitch, the lien holder on the other house may see that you already own a second house and be less inclined to accept a short sale without strings attached. The lender, after all, isn't in the business of losing money on account that you changed your mind. You need to evaluate these comments thoroughly as they relate to your circumstances, but do it before you take the next step.
2 votes Thank Flag Link Fri Apr 8, 2011
David,

I am not suggesting that you shouldn't share your "35 experience". Forget the fact that it is often self serving, incorrect (as in your earlier post), and doesn't answer the question. The problem is when you start soliciting business and holding yourself out as a Real Estate agent.
2 votes Thank Flag Link Mon Mar 21, 2011
Jeff, you should really ask this question in its own thread, but the answer to your question is an unequivocal, Yes.
1 vote Thank Flag Link Tue Jun 12, 2012
The reason for relocating to another state is unclear. If the reason is a job transfer, or job loss where a new job is found out of state, then this is a hardship that qualifies for short sale of the home. However, unless the new home purchase has occurred prior to placing the home in short sale status, your credit may disqualify purchase of a new home. Either of the above hardship reasons would explain the purchase of a home in a new location. Remember keeping mortgage payments current during short sale process will help diminish damage to credit.
1 vote Thank Flag Link Thu Apr 14, 2011
Dowd: The only "hardship" you explain in your question is that your wife will no longer have a job. Short Sale
start with a form from the bank asking to explain the hardship and to fill out financial info. If you are able to buy another house, while still owning one, the bank might NOT be in a "short sale" approval mode.

David Cooper, Las Vegas Foreclosure Investor in Bank Owned REOs with Cash Flow +1-7024997037
not a real estate agent
1 vote Thank Flag Link Tue Apr 12, 2011
Dowd - you have lots of answers from a Realtor (or unlicensed person in one case) to draw from. My perspective as a lender is just to say that FHA allows you to buy a house using FHA financing if you are moving 50 miles or more away from your current residence even if your current residence is also financed with an FHA loan. You will need a letter of explanation as to why you are moving. If your income will allow you to handle both mortgage payments along with your other debt relative to the FHA underwriting guidelines for debt ratios (an automated underwriting system will be the best way to know what level is approvable) and your credit is good enough to qualify, you should be able to buy your new home and then contemplate the options available to you relative to your current residence which would include renting it, short sale, or foreclosure - last option.
1 vote Thank Flag Link Wed Apr 6, 2011
Hello Dowd,

First let me say, there appears to be no Love for you in many of these answers, as if you were personally responsible for condition of our current economy. The fact is, you haven't given enough information for us to answer as to what your liability might be. The question comes down to hardship and candor. Things like why you are moving, and whether you are being honest with your intent affect the outcome. I know I will get hate mail on this next statement, but the truth is that words like "Fraud" and "Prison" are thrown around here rather easily, but not necessarily based on fact. Fraud and Prison may be real possibilities, but only under certain strict circumstances.

But I need to respond to the last post which is just plain wrong. according to The Mortgage Forgiveness Debt Relief Act of 2007 (which was extended through 2012), if the property is your principle residence, which I assume it is, you are not going to be liable for taxes on the deficiency. When you complete the short sale you will receive a 1099c (1099a if a foreclosure) from your lender, which will also be reported to the IRS. You will need to include this as income when you file. If it is prior to the end of 2012 that you complete the short sale (or foreclosure), you will also fill out a Form 982 where you will be able to declare that this was your principle residence. This will allow the amount of the deficiency to be completely excluded from your income and therefore reduce your tax liability.

Best of luck, and thanks again for reading.
1 vote Thank Flag Link Wed Mar 23, 2011
Come on. Really?

"Perhaps the classic "legal" definition of chutzpah is the closest; a person who kills his parents and pleads for the court's mercy on the ground of being an orphan." See http://www.jlaw.com/Commentary/SupremeChutzpah.html

So you're going to relocate, buy a house, and then--because you moved knowing that your wife wouldn't be able to work--claim a hardship?

I think we've got a new, better definition of chutzpah.
1 vote Thank Flag Link Mon Mar 21, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Dowd I have a seller/buyer in a similar situation. The lending criteria that they ran into was the ability to qualify for the payment on both homes and 25% equity in one of the properties with appraisals to be done on both properties. In a senario like that it is hard to be able to do a short sale and prove hardship.
1 vote Thank Flag Link Sat Mar 19, 2011
Dowd, be aware the banks are very familiar with this strategy. If financing is involved, it is likely you will be unable to acquire funding for the destination home.
Every situation is different. The strategy most beneficial for you and your family should be provided by your attorney or accountant.
I wish you the best in your new location.
1 vote Thank Flag Link Thu Mar 17, 2011
Hello Dowd,

This a bit of a tricky question, but I think you already know that. Buying a home while still owning another is a bit more difficult today that it used to be. Your income and current debt are key to the first part of the equation. As has been stated, the home you are moving from needs to be able to carry itself. It used to be that Lenders gave you credit for 75% of the market rent to offset the payment of the loan on that home. Today, they may not give you any rental credit at all, and may expect you to be able to make the full payment on both properties not accounting for any rent allowance whatsoever.

The probability of being able to purchase a new home depends largely on how plausible it is that you need to move into a different home from the one you are currently in. If it appears that you are just trying to take advantage of the new lower prices of homes as in a move within the same city, it likely won't happen without significant evidence that you do not intend to do a "Buy and Bail" type of deal. Lenders are becoming increasingly sensitive about their fellow Lenders getting stiffed. If your move to the new city is part of a relocation (regardless of reason) and your income will support both loans, you are in... at least with part one.

The second part of your question deals with short selling your current home. This is also tricky and frankly, subject to the whim of your current Lender. If they believe that you are in fact guilty of a "buy and Bail", they may pursue one of the 3 less desirable options available to the Lender. They could 1) require a cash contribution, 2) require that you sign a "prom note" (promissory note), 3) a combination of the two, or 4) decline the short sale altogether. If your current home is in Nevada, the statute of limitations fro pursuit of a deficiency is 6 years (not 7 as was stated earlier), so that bite of cheese has time to ferment, and could stink up your life a full 6 years later.

Convincing your current Lender that you have both a justifiable as well as a "Righteous" hardship, can be a bit dicey. You need to convince them that your move was necessary, your hardship is real and incurable in the near future, and that you did not plan on stiffing them from the start. That last one is where the rub is, but if you prove the first two, the last one should be plausible.

Having said that, it is not like there is a forensic pathologist examining your case in detail, looking for your conspiratorial and nefarious intentions. But 6 years is a long time to have to decide to come after you. Have you ever seen "Cold Case Files" on TV? Those guys always seem to solve the case, even long after the witnesses are dead and gone. This is why you want to hope, pray and negotiate for an agreement from your Lender that they will not pursue a deficiency...which I might add, I have been successful at doing just that in a large number of deals recently.

Just out of curiosity, Are you moving to or from Vegas?

If I can help, or you would like to drill into the details of shorting and buying at the same time, please feel free to email me at: Steve@REOVegas.com, or call my cell at:(702)-491-4663

Best of luck, and thanks for reading.

Web Reference: http://www.ForeclosureLasVegas.com
1 vote Thank Flag Link Tue Mar 15, 2011
Hello Dowd,

We have a complete team at Coldwell Banker and referral partners at that can get you the proper advise. Contact me direct at 702-897-5000 and I will put you in touch with the experts that can assist you. Posting answers to complex situations isn't always accurate without all the facts and we need just a little more information to properly assist you. I have 16 Years combined Real Estate Experience, was a Financial Planner for a top firm, have worked with a Licensed Mortgage Banker / Broker and was a residential Loan officer for 13 of the last 16 years, so rest assured we will get you the proper advise.

Sincerely,


Steve Brandon
Coldwell Banker Wardley
1 vote Thank Flag Link Tue Mar 15, 2011
I live in Martinsburg west va , I have been offered a new job in Northeast MD , can I do a short sale on the house I have now, and rent a apartment in Maryland
0 votes Thank Flag Link Tue Jun 12, 2012
Dowd. How much do you owe on your old house and what is the CMA? I just see how you are going to get a loan on a new house while showing yhe old mortgage on a credit report. Doesn't look dooable


David Cooper Las Vegas Foreclosure Investor in Bank Owned REOs +1-7024997037
noy a real estate agent
0 votes Thank Flag Link Fri Apr 15, 2011
Dowd,
The adds to get financing for the new house are very low if none. A period of time would need to happened before you can get financing again, also under what circumstances are you applying for the short sale? what is your hardship, because if you have a hard time paying now, what makes it different on the new house.
0 votes Thank Flag Link Thu Apr 14, 2011
I am not even the real estate field at all, but if Dowd cannot construct a sentence correctly, I doubt the wisdom of his scheme. Again, I work in health care, but if I forgave you $20 of the hundred you owed me and you turned around an purchased a new DVD player---I would find you and want the balance of what you owed me.

Seriously...a lender is going to finance this guy and his newly disabled wife in a new state, when he is carrying an unsold house in Nevada, the foreclosure capital of the US? How's this~R-E-N-T!
0 votes Thank Flag Link Thu Apr 14, 2011
Here's the answer:

If you are just "relocating" then it will be difficult to accomplish.
If your job is "transferring" you, that is actually an acceptable reason for a short sale on your current property and if you remain current through the procedure, you could qualify for an FHA loan on your new property.

Find a good loan officer in Nevada to walk you through the process.
Web Reference: http://TripointMortgage.Net
0 votes Thank Flag Link Tue Apr 12, 2011
You will not be able to buy a new house after a short sale on your existing home. There is a period of 2-5 year waiting. Google and you will get it.
'Good Luck.
0 votes Thank Flag Link Fri Apr 8, 2011
I would concur that you should speak to your financial advisor before proceding. Having said that,
if you feel you need to short sale the home you presently own,then proceed with that and talk with
your lender and realtor and try to get them on the same page. You may run into problems with
trying to qualify for a new mortgage for a new home,however,there may be other scenarios such
as Lease / Purchase,Lease/Option,Seller financing to consider.
0 votes Thank Flag Link Fri Apr 8, 2011
The first document I got from Bank of America inquiring about a "short sale" was to document the "hardship".
I'd sure like to see how you will put down in writting that you own a house out of state while at the same time you are claiming "hardship" so you short sell the home you just left.

David Cooper. Las Vegas Foreclosure Investor in Bank Owned Cash flow Houses. FReee List +1-7024997037...selling 20% below market
not a real estate agent. ask for 10% down investor financing
0 votes Thank Flag Link Wed Apr 6, 2011
Fraud? Are you kidding? It's not fraud.

Yes - you can sell short - both before and after buying another home. For respondants to suggest it would be fraud is assuming the seller is going to lie to his creditor of his current property about his actions - when he suggested no such thing.

Under Federal Tax law, TARP laws, FHA, VA, and conventional lending, there is criteria that has allowances for borrowers to purchase in advance or after selling short & not be penalized with capital gains tax, deficiency judgments and other forms of recourse. There are certain time frames to be aware of, and other limitations for the borrower to be eligible for such things as the exemption of capital gains tax, the availabilty of the HAFA program, etc. There are other issues to be aware of also, such as what the hit will be to your credit score, debt to income problems with loan qualification while still owning the old house, etc, etc. All these things need to be researched and a careful plan of action laid out before buying another property ahead of trying to sell short. So, do your homework and get a skilled short sale agent and/or short sale attorney on board.

If you are not getting solid advice with real facts from a skilled short sale broker then move on till you find one who know the ropes and is keeping up to date on these changes in the laws. Asking questions in a forum like this, gets you answers from agents who don't know what thery are talking about. It is NOT the way to make this very big decision.

Good luck.
0 votes Thank Flag Link Wed Apr 6, 2011
Elvin Carroll said "I think you are comtemplating bank fraud."
What happened in the housing boom has created a whole new level of monitoring and investigation. You will be leaving a "paper trail" a mile long with all the documentation you will be filing trying to do what you asked. It will so tranparent at what you are doing, that the chasnces of you succeeding are less than average.


David Cooper Las Vegas Foreclosure Investor Bank Owned. FReee List +1-7024997037
davidcooper@lasvegaswinner.org not a real estate agent
0 votes Thank Flag Link Wed Apr 6, 2011
Your best bet is to consult with an attorney and a CPA.
0 votes Thank Flag Link Thu Mar 24, 2011
Dowd,

In lieu of responding ... I will refer you again to Elvin Carroll's answer. I appreciate his candor and I gave him a thumbs up. He spoke wisely.

Beyond that, you should seek the advice of an attorney on this one.

All the Best,
Tina Ciaccio
LaBarre Realtors
Web Reference: http://www.tinaciaccio.com
0 votes Thank Flag Link Thu Mar 24, 2011
The answer is a yes/no answer. You can probably short sale your current home, but you will most likely be responsible for the deficiency. If you go ahead and find a bank to give you a loan and where that residence becomes your primary residence, your current home is a secondary place. Many banks will not forgive the deficiency on a second home even you can prove a hardship. You should check with a good real estate atty who specializes in this.
0 votes Thank Flag Link Wed Mar 23, 2011
Elvin siad "Or you can sell it for less and hope the bank forgives the remainder balance" And when they report the difference to the IRS, you will owe Federal Income Taxes which never go away.

David Cooper Las Vegas Foreclosure Investor Bank Owned. FReee List +1-7024997037
davidcooper@lasvegaswinner.org not a real estate agent
0 votes Thank Flag Link Wed Mar 23, 2011
You better check with a lawyer and a CPA !
0 votes Thank Flag Link Wed Mar 23, 2011
Elvin, great answer! Thumbs Up. Well thought out with consequences articulate well.
Web Reference: http://www.MyDunedin.com
0 votes Thank Flag Link Wed Mar 23, 2011
I would say, no. Unless you can show some hardship that requires the location change. You'd likely have to buy the home first. I would consult a short sale specialist in your home market. I have a partner in Las Vegas who specializes in short sales. Just email me @ mikemitateam@gmail.com.
0 votes Thank Flag Link Wed Mar 23, 2011
Dowd. If the state you are moving to is experiencing a downturn in sales and mediun prices, it might NOT be a good idea to buy even if you could afford it. It doesn't like you can afford it. And you might be bordering on fraud. Not a good idea.


David Cooper Las Vegas Real Estate Investor in Bank Owned Foreclosures. FReee List +1-7024997037
davidcooper@aol.com Ask about our partnerships. Not a Real Estate Agent.
0 votes Thank Flag Link Tue Mar 22, 2011
Can you do it? Probably! Should you? No!

Remember this. What goes around, comes around! There may be someone in the neighborhood you'll be buying in, thinking of doing the exact same thing you are. How will you feel about buying a property in your new location and having someone do to you, what you're proposing doing to your present neighbors?
Web Reference: http://www.golftobeach.com
0 votes Thank Flag Link Mon Mar 21, 2011
Dear Steve Mathews "

When did this "open forum" allow personal attacks on it's contributors. If Trulia has a problem with me sharing my 35 experience investing in Las Vegas Real Estate, you should take your concerns to them.

David Cooper Las Vegas Real Estate Foreclosure Houses. Freee List. Call +1-7024997037
0 votes Thank Flag Link Sat Mar 19, 2011
Hello again Dowd,

This last answer is a good example of an unlicensed person, trying to represent themselves as a licensee. Of course this is illegal in the State of Nevada, and since he lost his license, he should probably back away from the table and quit insinuating that he is licensed. I think it is probably time to turn him over to the Division.

I am not sure why an agent would not be willing to help you short sell your home. If you are moving from one State to another, this is a reason for the Bank to consider negotiating a Short sale. I am not suggesting that it is a smooth deal given the appearance that you are doing a buy and bail, but we still do not know why you are moving, so it is impossible to tell with 100% certainty what the outcome might be. While a Foreclosure is one possibility, it is the least profitable to the Bank.

A Short Sale still probably makes sense to your Lender as apposed to a Foreclosure which has the effect of netting them less in the long run, and since it is all about the NET to the Lender, a Short Sale is a likely scenario.

Regardless as to whether you are moving to or from Vegas, if you want to discuss this i more detail, please feel free to call me at (702)491-4663 (cell), or email me at Steve@REOVegas.com

Best of luck, and thanks for reading.
0 votes Thank Flag Link Fri Mar 18, 2011
Good luck finding a willing agent to short sale your current house when you are moving out of state. I doubt an experienced short sale professional will take you on as a client, and an inexperienced short-sale agent will just be spinning his wheels.

David Cooper Las Vegas Real Estate Foreclosure Houses Freee List +1-7024997037
0 votes Thank Flag Link Fri Mar 18, 2011
Hi Dowd,
Is it ok ethically or morally? You probably know the answer to that question. If your hardship is real and you can prove it, you answered the first question already. I suggest you consult with an attorney familiar with real estate law in the state that you live and also where you intend to move to. If you need more assistance let me know.
Good Luck,
John
Web Reference: http://www.JJLVRealtor.com
0 votes Thank Flag Link Wed Mar 16, 2011
In order to qualify for the new mortgage you will have to prove your ability to pay for both your obbligation. How are you expecting the lender in your first property to grant you a short sale? You just showed them you can afford both property. If I were the lender I would look to me very much like fraud in both cases, short sale or foreclosure, if you decide to go that direction. I suggest you to talk to an attorney before you take any decision.
0 votes Thank Flag Link Wed Mar 16, 2011
Dowd,

There are a lot of good responses here, some of which MAY be accurate.

As all REALTORS who have had continuing education already know it is a violation with a significant fine to "go outside of the area of our expertise". The Real Estate Division of Nevada has issues with REALTORS that do so for good reason. We do not specialize in the legal advise, tax accounting, potential IRS and lawsuit issues that may occur , we specialize in assisting clients in buying and selling homes!!! Such is the reason that we should refer those who ask for this kind of advise to the appropriate professionals qualified to make such determinations that can have an possible adverse effect on your future. You have my contact number, please feel free to call me for more information. Thank You and have a Great Day!!
0 votes Thank Flag Link Wed Mar 16, 2011
Hi Dowd,

Wow, a lot of responses out there for you to mull over.

I have a couple of questions for you:
Is your relocation work related?
If so, does your employer have a relocation department?
If not, as Steve pointed out, there are a lot of things that need to transpire for your desired outcome.
Will your financial situation allow you to obtain financing for this additional home?
Is your relocation by choice?
If so, it may be difficult (but not impossible), to prove a hardship in order to get your current lender from pursuing you for the difference if you choose to short sell.
My office is very successful in negotiating waivers.
But you have some other options.

Sounds like we need to talk

Rick Ream
Realtor®
Coldwell Banker Wardley
702-528-5207
RickReam1@GMail.com
0 votes Thank Flag Link Tue Mar 15, 2011
Wow, after reading all, If some of the answers you receive back seem too good to be true, they may just be!

Want to get the facts? We are here for you contact me anytime after 11am until 9 pm pacific standard time, and I will put you in touch with the powers that be.

Steve Brandon
Coldwell Banker Wardley
702-897-5000
0 votes Thank Flag Link Tue Mar 15, 2011
Great question!
If you are current on the mortgage, you may be able to short sell your current home and buy a home immediately in the new state. FHA has a loan program for just this purpose. Call me at 702-860-1800 and I will give you more information, or email me at carole.laman@gmail.com and I will forward you the FHA bulletin that relates to your situation. Carole Laman, REALTOR with Keller Williams Realty Marketplace 1 in Las Vegas, Nevada
0 votes Thank Flag Link Tue Mar 15, 2011
Hi Dowd,
Short Sale is very involved and at the same time you want to buy a new house. Please consult a Certified Public Accountant or an Attorney before you do anything.

Nimfa
Realty One Group
702-469-6809
0 votes Thank Flag Link Tue Mar 15, 2011
You may want to ask an attorney who practice real estate law and/or bankruptcy. If you can afford to purchase a home the bank will probaly not approve you for a short sale. To be approved for a short sale you will have to be able to show a hardship. If you just bought a new home, that may be a little difficult. If I was your Agent I would not advise you to proceed with a purchase of a new home with the intent to short sale your previous home.

Mike
Simply Vegas Real Estate
702-985-5566
0 votes Thank Flag Link Tue Mar 15, 2011
If your intention is to short sell your current home from the start I recommend speaking with your lender. If you are relocating for work you may be able to short sell your home and then purchase in your new location with the same lender or even another lender. The reason buyers now have to qualify for their current home and their new home mortgage payments without using rent as income is to make sure you can afford both payments in case it is vacant and, more importantly, to prevent the "buy and bail" scenario you are asking about which is considered loan fraud. Sounds like you have a legitimate hardship and with complete transparency, you should be able to purchase another home. I also recommend you sit down with a real estate and/or asset protection attorney before you make a decision. There is a lot of misinformation out there about short sales and foreclosures, protect yourself and your family.
Web Reference: http://www.tamaralarisa.com
0 votes Thank Flag Link Tue Mar 15, 2011
I would consult an attorney that knows real estate. There could be some serious legal ramifications like mortgage fraud.
0 votes Thank Flag Link Tue Mar 15, 2011
If you can qualify to purchase a home the complete a loan app with mortgage broker who can determine if you can or can't

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Tue Mar 15, 2011
Hi:
The other answers are correct. But-be aware that you are lible for 7 years (in Nevada) the bank's loss on a short sale. Please call me for a short explanation and make sure you get a bank release of your obligations. when your real agent short sales your property. Definately seek legal advise as many short sellers may be in for a big surprise in the future
0 votes Thank Flag Link Tue Mar 15, 2011
Yes that's the right order to go with. If you need a real estate agent you can trust where you are going let me know. I have the best refferal group around. 702listings@gmail.com
Web Reference: http://www.702listings.com
0 votes Thank Flag Link Tue Mar 15, 2011
You are doing it in the correct order for sure. The best option is if you can purchase the new home (second) under your spouse or another persons credit. However it is possible either way. Call me with questions or concerns. I can set you up with a great realtor where ever you are moving.
Web Reference: http://702Listing.com
0 votes Thank Flag Link Tue Mar 15, 2011
I basically understand what you are saying. In order to buy the other house first, you will have to prove that you can pay for both houses. The lenders will not let you use the supposed income from the rent that you will be getting after you move. You will have to prove you can afford both properties or it will be real hard to find a lender. After you get this done and you buy another house and you want to short sale one because of hardship, I would say this is possible. But you will want to be careful and check the everchanging laws in the reguard.

Ben Carrison
Elite Realty
702-325-4820
0 votes Thank Flag Link Tue Mar 15, 2011
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