OK no more guessing on where. (BRRRR I am chilly LOL)
Question though, were our answers useful to you? Do you have an agent familiar with working with short sales? It's really important, as the banks are still overwhelmed with them, and unless your agent is on top of the situation (though since it's your agent, he/she will have to go through the sellers agent to get things done) a short sale can take a long time. Most important in representing you is that he/she is not afraid of being a PITA (LOL) to get the scoop on where the process with the bank is.
Best of luck
This assumes you are an unhurried buyer willing to be patient for a fantastic deal. If your time frame does not allow for this, you might want to look at resale properties, or foreclosures that have been pre-approved by the bank.
Ask your accountant, but on the buying end there are no tax consequences for buying a short sale, only benefits.
Everyone gave you great answers, especially Pete. Everyone in the transaction benefits.
From the Realtor standpoint, I just recently completed 3 shorts sales, and let me tell you, it's a LOT of work on the selers agent side (take for example calling the bank, A LOT, and having 45 minutes either on hold or being transferred from department to department to get the right person to speak to), the amount of paperwork we need to gather to send to the bank, the continual follow ups etc.
As for the bank, it doesn't end up foreclosing, (which can take way longer than a short sale), owning the house, and typically selling the house for LESS at sheriff sale, than it would have if done as a short sale (so the bank makes a few more bucks even though still less than what was owed)
On the seller side, it's better to have the short sale on their credit record than a foreclosure.
From the buyer side, if you are not in a hurry to close, and the house is in decent shape, you can get a great house at a great price, and particularly now, at a great interest rate.
Perhaps we're not but I based that on the info that you already posted in your intial post. of a 2BR short sale in North brunswick listed around 124K and then when you mentioned that the complex is not fha approved. there are only 3-4 developments in town that are non fha approved and only one that has properties listed that low. So if you're not purchasing in The Oaks then accept my apologies.
As for the home costing you 3 times as much over the life of the loan. that's the case with any home that you purchase with a mortgage and tay for 30 years and pay it off to term. But do you really expect to firt of all stay in the home for 30 years? or keep renting for 30 years and not have the benefits of homeownership, tax deductability and appreciation?
the short sale you are buying is definitely a good deal. the same units over there sell in the 120's or higher. No you don't have to pay any back taxes as they will paid out of funds at the closing. as far as who benefits from a short sale? the truth is that everyone benefits from a short sale (in this situation). the buyer gets the home at a discounted below market price (this is generally not the case in short sales, but it is in your case because most sell near fair market value or the bank doesn't approve it). the seller wins because they are released from the loan obligation and don't have to bring money to cloing to get out from underneath the home. the bank wins because they don't have to expend huge amounts of money and lost revnue for up to 2 years by forclosing on the property. It also removes a bad loan off of their books which ultimately can affect the solvency and profitability of the bank. Realtor benefit the ame as any other sale. they get paid when it closes. but in the case of short sales there's much more work involved for the same or less commission than on regular resale listings
As I told you previously. I don't think you're aware of just what you're sitting on.
NJAR Million Dollar Distinguished Sales Club 1988-2009
Gloria Zastko Realtors (R)
Cell Phone: (732) 439-0472
Regarding taxes on the unforgiven amount, the buyer is not liable, but the seller can be. HR 3648 or the Debt Forgiveness Relief Act of 2007 is the Federal legislation that gives the criteria for tax implications on a short. If you "google" it you'll get all the details. I am not a tax advisor and the criteria is too detailed to list here. Whether it is worth it or not to do a short for a buyer, only you can reach that decision with proper advisement from a really good and experienced Realtor in the area of Short Sales. There are too many criteria, variables, and scenarios that would need to be evaluated to determine that.
If you contact me, I'd be happy to go into more details on how a short sale could benefit you specifically.
Hope that helps.