Posted by: Catherine | April 2, 2008

Doing a short sale? Experience counts!

Never is it more important to find a real estate agent who has experience!  If you are contemplating a short sale, you must find an agent with experience in short sales.  The sad truth is that when the markets are like this, it equals opportunity for many.  And I’m not just talking about the agents who step into the game with the true mission of helping homeowners.  I’m talking about the huge increase in real estate training companies looking to train agents to make big bucks on short sales.  Now, of course, like anything, there are good and there are bad… some training and seminars are helpful, informative and do give a value added benefit to the agents out there. But there are other training classes, seminars and online webinars that likely were developed by trainers who NEVER stepped foot into a short sale transaction.  There are now short sale certifications. You can get to be some sort of short sale certified agent by going to a seminar, or watching a training class on your laptop.  Be wary.  Again, some turn out great agents with more knowledge to help their clients, others are putting out wrong information which will ultimately hurt consumers.  Here’s an example.  On a nationally distributed agent newsletter was a Top 10 of Short Sale questions.  One question asked about taxes, and whether one would owe income taxes or receive a 1099 if they do a short sale.  The answer was shocking (to me). 

It WAS true, now it’s not. Consult your Tax Attorney or Qualified CPA.  Very recently the tax law was modified and now most people who do a short sale will have no taxes due.”

Folks it IS true.  Think about it.  Always see your tax advisor.  Now is not the time to listen to your friend or your neighbor and no agent should ever be the one to tell you that you will have no taxes due-as you might. The new legislation HR 3648, The Mortgage Debt Relief Act of 2007 will actually help very few. It will help those with purchase money loans (the loan you used to buy the house, not a refinanced loan, except under some circumstances), it will NOT help if you have a second (unless it can be deemed purchase money) or a third loan, or equity line (unless used for capital improvements) on your property – you may still get 1099’d on those.  Its complicated. It will not help if this is not your primary residence.  So how many have refinanced? How many have more than one loan?   My guess then, is the opposite of what that real estate trainer said…. I’d guess that MOST people may actually be looking at receiving a 1099 and owing taxes.

Due to the sheer numbers of companies out of business, and the way different banks show these losses on their books, you may not get a 1099, but still, it may not relieve you of tax liability. You have to see your tax advisor promptly.  Some people may be able to claim insolvency and avoid taxes, but only a qualified CPA or a tax attorney can tell you this for sure.  If you need a referral to a tax attorney in Alameda or Contra Costa to help you with your short sale or foreclosure tax questions, just ask.

So just heed my warning.  Just because an agent has some fancy title or training acronym next to their name, you must still check their experience with the short sale process. You do NOT want to be your agents first real short sale transaction.  I mean agents all have to start somewhere, but many agents will start by partnering on their first couple of transactions with an agent who does know the short sale process.   Ask to talk to current or previous clients with successful short sale outcomes.  Ask to talk to their title company.  We work daily with our title company/escrow rep – she’s priceless in our transaction process.  She starts working for us from the minute we get the listing.  There are ways you can check experience, and you may regret it if you don’t.

Contact us for short sale information, resources and to market your home if a short sale is the answer for you.  Always seek counsel from an attorney, CPA and/or tax advisor.  We can not advise you in these matters, but we can point you in the right direction.

Catherine Myers 925-683-2125

Terry Osburn 925-381-9944

Serving Contra Costa County.  Pre-foreclosure, short sale, foreclosure avoidance and referrals to those who can help with a loan modification. 

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