I built an investment property to sell with an appraisal of $690k. Today it is for sale for $499k and for

Asked by Gary, Swanton, MD Mon Dec 10, 2007

approx 2 years. I owe $460k and it may sell for $300-350k. If I sell it as a short sale or forclose, can they go after my other assets and how bad will it hurt my buying power in the future?

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5
Keith Sorem, Agent, Glendale, CA
Mon Dec 10, 2007
Gary
Generally speaking if you have ONE loan on the property, it's a purchase money loan. That means that the only collateral is the subject property, so you might be able to do a short sale without any properties or assets at risk

However, if you did a refi and took the cash to either fix up or retain, that could cause a problem. Lenders are leary about getting stuck with a $100K bill and have you walk away free and clear.

Hope is helps. Definitely discuss with a Realtor.
Keith
1 vote
Holly Futrell, , Chesterton, IN
Mon Dec 10, 2007
Gary,

If you do a short sale you will be responsible for the price differance between the amount you owe and the price you sell. The IRS sees this amount as taxable income. Something to keep in mind.

Holly
1 vote
Gail Hiebert, , KCMO
Mon Dec 10, 2007
Garry. your situation is not an isolated case. I have found many investors and builders who have built on the projected future market growth to be really hurting today. As a suggestion, you might try an Auction company in your area and discuss possibilities with them. I have observed that many investors who built in FL are going into bankruptcy to save their personal residence from loss in a bankruptcy situation. If you sell it on the short side, and you can list it that way after discussing the issue with a knowledgeable banker-attorney, at the price stated in your question, there will be a financial shortfall that you will have to absorb. Can a lender go after your other assets? I think that if you will refer to your lending documents that you received from your lender, you will find the answer to that question, and usually, but not always, lenders will come after your other assets unless that with a good relationship with your banker, they are willing to refinance and provide other options for you to help in this trying market situation. It's difficult to resolve this without positive conversations with your banker/attorney, and others in your circle of influence, and that is where I would start. Hope this helps you.
Web Reference:  http://www.taxcats.net
1 vote
Mike Kelly A…, Agent, Santa Rosa, CA
Mon Dec 10, 2007
Gary, I don't know if being an investor will allow a short-sale. Most of ALL the new initiatives and laws coming down the pike are for "owner-occupied/primary residence" dwellings and are very specific as to when the loan was originated and what TYPE of loan is in play.
As an investor you're most likely on the hook. I would call the lender and see what deal you can cut and after that I'd call a good attorney and cpa. Depends on how much assetts you have also. If you're slim, take a gander at BK law. It's there for a reason. good luck.
1 vote
Don Bush Team, , Columbus, OH
Sat Dec 22, 2007
You should enlist a Realtor and a financial advisor/or Attorney.
0 votes
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