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Dee, Both Buyer and Seller in Lauderhill, FL

What happens when you want to sell a house you are upside down in?

Asked by Dee, Lauderhill, FL Sat Aug 2, 2008

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you can do a short sale. if you need help call me in the office to talk about. 954 236-7009 we have an attonry office who will handle the short sale. the bank will pay their fees and the realtors commision. call me to talk about. 954 236-7009. sharon k. welker.
0 votes Thank Flag Link Fri May 9, 2014
Dee, I am not an accountant, so be sure to verify with a CPA, but as I know it you will be getting the 1099 from the bank in short sale situation, as well as with foreclosure. These are not bills from the IRS, they are basically "W-2's" from the bank for the difference of what you owed to what it sold for. You don't pay that difference, you will pay a smaller precentage of it. There is a much better chance for a smaller total dollar amount on the 1099 from the short sale, as the lender will lose much more in a foreclosure. If I can help you in anyway, please feel free to contact me. Good Luck.
Mike Ceparano 813 417 6698
ceppym@yahoo.com
0 votes Thank Flag Link Sun Aug 3, 2008
Hi Dee,

If you believe yourself to be insolvent than perhaps you could qualify under such circumstances. If you care to discuss further, please fee free to email me or call me. Regards.
0 votes Thank Flag Link Sat Aug 2, 2008
Insolvent means your debts are greater than your assets. If that is the case, talk to your lender, seek out a good realtor and sell your property for the best price you can get.
0 votes Thank Flag Link Sat Aug 2, 2008
Hi Lynn,

If I'm understanding what insolvent means, I believe that I am. My debt to income ratio is pretty grim right now and I have owe way more money than I own assets. Purchasing this rental property was suppose to make matters better, but instead it added to my headaches.
0 votes Thank Flag Link Sat Aug 2, 2008
Dee, A short sale still might be your best option! You must contact your lender and tell them your situation. Find a good realtor and list the property at a "fair market value". This is not an "Easy Out" for a poor investment, but a solution for a circumstance that will take you under. If you have an asset base that is substantial then sell for best price and pay the difference or as lynn suggested set up a promissory note and pay over a period of time.
0 votes Thank Flag Link Sat Aug 2, 2008
I am sorry, Dee, about your and many others situation. I have a couple clients / friends who are going through the same thing and asked me to list their homes eirther for a huge loss or for short sale. It just really made me want to cry. I know them and they are great people, there was never an intention to have this happened but all the things that are going on, just makes it a downward spiral. So very sad!

Have you tried to negotiate a modification with the lenders? I do hear they are more willnig to do that now a days - that is, if you are willing to hold onto it.

Although I am not an accountant, I have been recently wondering about the logic of it and how this really will play out -

If you purchase something for $250,000. still has a balance of $200,000. Sold it for $170,000 with a net loss of $50,000 (including closing cost paid, commission, etc). So the lenders will 1099 you for $50,000, which will be your so called 'gain' - yes, ridiculous, from the lenders side.

But if we look at the whole picture, where you bought it for $250,000 and sold it for only $170,000; then paid commission, closing close of $20,000.

I wonder, per accountant and after you really figured everthing (purchase price, expenses, rental income, write off, depreciation, etc) and the $50,000 so called 'Gain' from lenders, willl you still be paying tax on this or not.

Like I said, the accountant might be able to sort this out.

Do you see what I am trying to say?

Sylvia
0 votes Thank Flag Link Sat Aug 2, 2008
Sylvia Barry,…, Real Estate Pro in Marin, CA
MVP'08
Contact
Dee,

Are you insolvent; liabilities exceed assets? Or was it just an investment that didn't turn out good? Another option might be to consider a promissory note for the deficiency if you're not insolvent.
0 votes Thank Flag Link Sat Aug 2, 2008
This mortgage relief act would have been great, but it doesn't apply to me. It seems like every avenue is a dead end. All of these relief laws that the government is passing only helps those who are in danger of losing their primary residence. This property is a rental property I purchased, which turned out to be the worst decision of my life and I'm trying to figure out how I can just be rid of it for good. But due to current market conditions, i'm pretty sure i'm upside down in it.
0 votes Thank Flag Link Sat Aug 2, 2008
Dee,

Alot of things occur when selling your home that you're upside down on.

1. First, you will need to demonstrate that you have a hardship in order to qualify with your Lender to sell your home as a short sale.
2. You will need to gather documentation of your hardship.
3. You will need to have a Sales offer on your home before your Lender will consider the Short Sale.
4. You will need to have a Buyer that understands and is willing to have patience in going through the Short Sale process as the sale will typically take longer than a traditional Real Estate transaction.
5. You will need a Realtor representing you that is knowledge in Short Sales as the documentation and negotiation process is critical to a successful closing.
6. Once you have had a successful outcome of selling your home as a short sale you probably have concerns in regards to any taxes that may or may not be payable. Your Lender will provide you with a 1099.
7. The Mortgage Forgiveness Debt Relief Act of 2007, set guidelines for your tax concerns: this pertains to your home being your primary residence and/or were you insolvent when your home is sold which would require a special form to be filed with your income taxes. This can be gone over more in detail should you have questions. However, with any tax issue you would always want to consult with a Tax Advisor as I would not want to provide you with tax advice.
8. Lastly, if your home has been sold as a Short Sale, you can now get on with your life looking forward to the day again in which you will be able to be a homeowner. This will vary depending upon your deliquency on your mortgage payments.

Your doing well by trying to find out all that you can about Selling Your Home As A Short Sale!
0 votes Thank Flag Link Sat Aug 2, 2008
Hi Dee:

i am not a tax accountant so you really should consult a tax accountant on this. However, I just want to mention that you may or may not get a huge IRS bill on a short sale, depending on some very fine criteria set by IRS (as usual, that's why you need tax accountant).

However, in general, if your loan is all purchase money for your primary residence (meaning the only money you borrowed is for the original purchase money of your home, not an equity loan for remodel, purchase a car, pay off credit card bill, ..,etc), then you might not have to pay tax on the short amount.

Again, safest bet is to check with the expert - the accountant.

Sylvia
0 votes Thank Flag Link Sat Aug 2, 2008
Sylvia Barry,…, Real Estate Pro in Marin, CA
MVP'08
Contact
Dee

I know you asked about this a couple of weeks ago. With short sales you use to get hit with the difference of what was owed to the bank. Bush passed a bill last year stopping that. So you would not get hit with it.

Why don't you set up a time shen someone can come and better explain this to you in person. You have alot of good questions.
Web Reference: http://www.neerpat.com
0 votes Thank Flag Link Sat Aug 2, 2008
With short sales, i've recently found out that you will be hit with a huge IRS bill...is it even worth it?
0 votes Thank Flag Link Sat Aug 2, 2008
You should contact your lender to seek a short sale. If you are behind in your mortgage they are more apt to work with you in a quicker and more meaningful way. You should also find a broker who is well experienced in short sales, not any broker can do them, it takes a special kind of person with knowledge, skill and lots of patience. Make sure you ask if they have successfully completed a short sale before. It can be a long and drawn out process. But remember your first call should be to your bank or mortgage company. Be up front, if the person on the phone isnt a help,l ask for the supervisor. Be nice but be firm.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Aug 2, 2008
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