Stop treating a Short Sale with less Respect than a TRADITIONAL SALE! Massachusetts New Hampshire

Ok, I’ll admit. I LOVE short sales. LOVE LOVE LOVE THEM. I know I’m in a vast minority. Not everyone loves the challenge, nor can rise to the occasion. I TRULY love short sales in Massachusetts and while most people give the eye roll when I say we are an attorney state, I think most of the time it works to our advantage. I mean in New Hampshire you sign a purchase contract FIRST and THEN iron out details, but in Massachusetts you can sign an OFFER first which stipulates the DETAILS and THEN sign your purchase contract. It’s a beautiful thing.
The problem I run into is some of the agents I’ve spoken to seem to fall over backwards when I tell that inspections should be done within 5-7 days of signing the purchase contract. It’s as if BECAUSE it’s a short sale, it’s treated “differently” than a traditional sale. NOOOOoooooooo. This is the ABSOLUTE WRONG premise.

First, keep in mind we are hired by the sellers, so my job is to protect them. Most of the time the selling agent has referred us to the homeowner, and we’ve worked out many of the details of the transaction long before the first offer comes in on the property. I LOVE Realtors who “get it” – Realtors who list a lot of short sales “get it”, but there are some agencies that teach short sales…well…backwards.
Last week I got a call from an Andover, Massachusetts real estate agent, who was interested in referring us to her homeowners. She didn’t like short sale and then when I explained that we make sure inspections are done up front, she seemed to think buyers would never go for it. First, give buyers some credit. If they like the home enough, they will usually work within the parameters the seller set for the sale, but more importantly you CAN’T wait for the short sale approval and THEN get the home inspected or you could likely jeapordize the sale. Here’s why. Let’s say we negotiate a sale, and God forbid it takes 5 months. This could be sale that has gone back and forth with counters, multiple BPO’s, appraisals, etc., and then when the waters part, we get that nice approval, full deficiency release and then read we have 3 weeks to close. Well, let’s say, the buyer is FHA, the inspection process is pretty grueling and can take up to two weeks, which leaves you ONE week for it to get to underwriting and pass the many OTHER requirements the buyer’s lender set forth. It won’t fly. What if the SELLING lender is nasty and says, “Listen, we’ve given you FIVE months to get your financing, inspections etc., in order and all you are going to get is this three weeks to close,” then what? Ok, upon inspection you find a faulty heating system, or mold, or a Title V that won’t pass, you may have a SLIM chance to go back to the seller’s lender and ask for a reduction or change terms of the approval. WHY WOULD YOU WASTE YOUR TIME? WHY WOULD YOU WASTE THE SELLERS TIME? WHY WOULD YOU WASTE THE SELLING LENDER’S TIME OR YOUR AGENTS TIME? GET YOUR INSPECTION DONE UP FRONT BEFORE the purchase contract is signed and that way if there is a significant problem you can adjust your price before you waste anyone’s time.
Get your offer solid, and in order if you are serious about the property. The agent I spoke with said she works with buyer’s that go around making multiple offers on properties. Other than an investor who is looking to buy multiple properties, that doesn’t fly. If you are making multiple offers on properties, then you are HARDLY committed to any ONE property. Get your inspection in order, get your financing in order and a commitment within 45 days and you’ll have a MUCH higher success rate of getting your offer accepted. BUYERS SHOULD HAVE THEIR INSPECTIONS DONE LONG BEFORE SHORT SALE APPROVAL SO THERE ARE NO SURPRISES. You don’t want ANY hold ups at closing. Once the approval is issued, you need to get to your title agent and get closing scheduled ASAP, NOT get your inspection done..NOT get your financing in order then.
A short sale is the same as a regular sale, only the lender approves the sales terms. Don’t treat it with less respect.

Maryann Little, VP Short Sale Mitigation (negotiations)
Massachusetts, New Hampshire and soon to be Maine
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It’s a Short Sale People. STOP TREATING IT LIKE AN REO!!! New Hampshire Massachusetts Short Sale

It’s been a crazy week for us.  We had three closings, a lot of scrambling, driving and then two listings came in today that we assigned out to the Realtors we work with.  (Side note: Congrats Cheryl Dwyer on Cohasset!)
On occasion, we have a homeowner call us that lives in an area that we don’t have an agent close by that we’ve worked with.  We LIKE to give our listings out to agents we’ve worked with, who know how to work with us, know how we work our short sale negotiations and can close property smoothly, but the listing came in and it was in an area in New Hampshire that was fairly remote, so I had to reach out to one of our Realtor networking boards to have someone list it.
I got a call from an agent who I’ve spoken with on multiple occasions, but we just didn’t seem to be able to work together for whatever reason, but he was interested in this listing so we assigned it to him.
He immediately got going on the legwork which was great.
He called me tonight and asked a funny question.  Are you submitting multiple offers to the bank if I get them in?  I explained I can’t submit multiple offers.  Only one executed offer goes to the lender and all the rest are put into backup position.  He said, “Yes, that’s what I thought, but I was working on a short sale earlier this year and submitted an offer and two weeks later had an agent demand her offer be submitted to the bank.”
Now, I’ve had that happen myself.  We had a property in Newbury, MA we negotiated and 3 offers came in.  The homeowner selected the strongest offer and went forward.  One of the agents (A CDPE nonetheless) demanded his offer be accepted and when we said no, he said he would submit it directly the lender.  I laughed so hard I almost fell off my chair.  AND THIS GUY WAS A CDPE??  For those who don’t know, you CAN’T submit your offer directly to the lender in a short sale.  Your contract is with the SELLER, not lender.
Anyways, back to the story.  I explained to the new Realtor I was working with he shouldn’t have been worried if the property was already under contract.  I guess he had more to worry about that I thought when the pushy buyer showed up at his seller’s door step with a P&S in hand and said, “Did you see this?”  Can you IMAGINE?  Next thing you know he was reported to the NH Real Estate Commission.   I thought, “What for?”
Here is where the story gets VERY interesting.  He explained to someone at the commission that he already had it under contract so legally he couldn’t submit the other offer and do you know what the woman said?  “Why didn’t you submit the other offer to the bank?”  Someone at the New Hampshire Real Estate Commission said that!!!!
Ummm….let’s see.  Because an agent must follow the law and you CAN’T have two executed contracts on the same short sale.  IT’S NOT AN REO where multiple offers are submitted to the lender!!  People confuse the two.  You contract is with the SELLER of the property, NOT  the bank.  I cannot believe someone at the commission said that to him.  Everyone get online RIGHT NOW and look up tortious interference.  Any real estate agent should be VERY nervous about submitting two executed contracts at once.  You could get sued very quickly, buy the buyer, seller and “other buyer” – It is NOT an REO it is a short sale and the seller is NOT THE LENDER.  The seller owns the home.
Maryann Little, VP Negotiations
http://shortsalemitigation.net/
Massachusetts Short Sale Negotiations
New Hampshire Short Sale Negotiations
http://rapidpropertyrelief.com/
Pre-foreclosure acquisition services

Source: Massachusetts Short Sale (http://s.tt/13oCT)

NO – YOU control the list price – Massachusetts Short Sales

We’ve had a lot of new homeowners call us lately for assistance with short sales.  We assign these listings to the more experienced agents we’ve worked with.  We’ve worked with agents from Keller Williams, Remax, Century 21, Weichart, and many others. On occasion we have to work with a new agent.  We work with the new agents if they have questions or want to know about the process.  This past week I had two separate agents ask me the same question.  “How do I know what to set the list price at?  How can I tell what the bank wants to NET?”
This is where their inexperience shows a bit.  It’s ok, because we all had to start somewhere.
On each short sale we mitigate, we have the agents do a thorough market valuation.  They provide comps and we ask them to provide a high and low price, based on similar solds.  We usually ask them to take a look at the local market for the amount of REO’s and short sales.  MOST times, when the lender does their valuation, they cannot look at sold comps for REO’s and Short Sales, however, if you want a TRUE comp you HAVE to look at similar properties in that category.  There are some properties that are extremely difficult to comp, but we all work together to get an idea of what the property will sell at.
The key to remember is WE or YOU the listing agent have control over the list price…NOT the bank (unless you are doing a HAFA short sale) – It’s important that YOU show the bank what the property is worth and not the other way around.  There are MANY times the lender will send out someone to come up with a value for the property and their “opinion” does NOT reflect the local market or condition of the property and then you have an uphill battle of trying to prove why your offer actually supports recent sold comps.  Take control first.  You need to set the list price.  Once you can show market history on the property, it shouldn’t be hard to prove to the bank why your valuation of the property is the accurate one.
http://shortsalemitigation.net/ New Hampshire and Massachusetts Short Sale Negotiation
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Maryann Little, Managing Member
Short Sale Mitigation, LLC

Source: Massachusetts Short Sale (http://s.tt/13Cdz)

Massachusetts-Short-Sale: More bad news for HAFA short sale program for Mass...

Massachusetts-Short-Sale: More bad news for HAFA short sale program for Mass...: "I have made it clear I am NOT a fan of HAFA. Since its inception it has been plagued with issues. I have a homeowner we are currently w..."

More bad news for HAFA short sale program for Massachusetts and New Hampshire Homeowners

I have made it clear I am NOT a fan of HAFA.   Since its inception it has been plagued with issues.  I have a homeowner we are currently working with in New Hampshire who really wanted to try for a HAFA short sale, so we went to work.  This short sale was serviced by Chase.  I was fairly impressed with how quickly we did get a negotiator assigned, but ALAS we had issues from the point of the valuation.

First, the valuator got out of the back seat of a car, didn’t shake the listing agents hand, nor introduce herself.  She ran in and out of the property and “took pictures” – Now on the phone this valuator told the listing agent she had TEN YEARS experience.  When the listing agent met her, he said she couldn’t have been more than 22-23 years old.  So I’m sure you can deduce what transpired.  YES our valuation came in at LEAST $50,000 over offer price. 

I knew it would be an uphill battle.

We explained our concerns to Chase, who didn’t seem concerned in the least.  The buyers got an appraisal which came back even LOWER than their offer price.  Thankfully they were cash buyers.  We submitted the appraisal and still the negotiator was unmoved. 

I called in and spoke with a gentleman in the short sale department who in no uncertain terms explained if the homeowners did a HAFA short sale, they would only consider an offer $10,000 ABOVE list price!!!!!!

We are NOW battling this valuation more by providing 3 comps and a map with radius around the surrounding property.

The Treasury Department is considering MORE changes to the Home Affordable Foreclosure Alternatives (HAFA) program in order to boost short sales and deeds-in-lieu of foreclosure.  They are looking at making minor changes, but nothing has been finalized yet. 

This would be the SECOND revamp of the failed program.  Changes this year include servicers not needing to verify a borrower's financial information (talk about opening the doors for strategic default) or determine if the borrower's total monthly mortgage payment exceeds a 31% debt-to-income ratio.

HAFA servicers initiated 17,781 short sales and completed 8,541 through May this year throughout the country.  The 8,541 is a big increase over the 342 completed by last fall, but is only a blip on the radar when you compare it to the 113,000 TRADITIONAL short sales completed through April by the top 10 servicers.

What I find disturbing about the numbers is the treasury’s failure to break out the deed in lieus from the actual completed short sales.  The 8,541 number is NOT representative of successful completed short sales.

HAFA does have some benefits, but when you risk having to deed the house back, I do not see the benefits outweigh the risk.

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Massachusetts Short Sale
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WHAT?! You want buyers to pay a $5000 negotiation fee? Taking a look at short sale negotiation fees in Massachusetts

It’s funny because I usually let the naysayer’s comments roll right off me.  I find people who freak out about a buyer having to pay a negotiation fee have NEVER CLOSED a deal where a buyer paid a negotiation fee.  I can always tell an old school agent.  They’ve been in the business a while, think they know everything about real estate, and are mostly close minded and unopen to “other” ways of doing things. 

This is a true story.  I won’t name the agent, but she’s pretty well known.  One of my reps met this agent.  They had a great conversation and our company was invited to speak at her brokerage on the North Shore.  Whenever we are invited to speak about short sales it’s an honor.  There are still a lot of agents in New Hampshire and Massachusetts who are not comfortable with short sales.  So it’s a win win whenever we can speak at a brokerage.  We went in, did our thing and later had her call us with her first referral.  Now, she knew how our fees were collected and STILL gave us a referral.  I reviewed the paperwork and saw the homeowner filed bankruptcy and “surrendered” the property.  I kindly notified the agent we could not mitigate a short sale if the homeowner didn’t own it.  She didn’t even seem embarrassed that she didn’t know this little tidbit of info, but it tipped me off as to why this home never sold.  It was on the market well over a year at an outrageous price.  ***SIDE NOTE**** [PEOPLE, YOUR SHORT SALES NEED TO BE PRICED AGRESSIVELY – NOT AT THE TOP OF THE MARKET] Anyways, the home didn’t sell, homeowner filed bankruptcy and the home was surrendered.   I also got the distinct impression this agent didn’t even know what was going on with her own sales.

So, the following week she contacted me again with another homeowner referral.  She asked me to explain all of the risks of the short sale to the homeowner with one of her top agents on the line.  When I was through the agent stated how fully impressed she was with my knowledge and thanked me.  Then the fun part began…the paperwork.  I gave the homeowner the packets for each lien holder on the property.  This house was listed so I logged on to see what she had done with the listing.  This house was nothing more than a mobile home, or at least that’s what it looked like.  She had it listed at $300,000.  I almost fell off my chair. That was back at the beginning of March and I just looked at the listing.  It’s  down to $250,000 and this is just about the beginning of JULY.  What a waste of time!!!!  This is what KILLS me.  Anyways, I’m off track.  So I explained to the listing agent how we have to put our disclosures in the listing. The seller was all set to go forward and we explained that potential buyers need to know up front that there is a negotiation fee and it’s up to them if they want to go forward.  Suddenly, after two referrals and speaking at her brokerage, the agent couldn’t wrap her mind around the negotiation fee.  Remember my “old schoolers?”  Well this was one of them.  After going back and forth via email and explaining AGAIN how we do this, she was not comfortable, so I kindly stated we really shouldn’t go forward if she wasn’t comfortable.  It will never work if the listing agent is uncomfortable.  It was very cordial, however very confusing  after the two referrals and invite to speak at her brokerage.

More and more 3^rd party negotiation firms are popping up, from lawyer’s offices, brokers, agents, title companies, and others with seemingly different experience.  Everyone charges a bit differently. I know MOST of those that charge the buyer like we do, because they have the same fee structure.  Agents are SICK of short sales (or at least the agents that come to me) – So, I decided to research this a bit more.

In NNERENMLS, (neren) Nick (my partner and a broker) told me there is no way to do a search of files with a keyword.  Maybe there is, but he couldn’t see it.  However, in MLSPIN there is!!  So I wanted to check to see about the horrible “negotiation fee” some agents seem to be very wary of.  Here is what I found.  Out of 28 Single and Multi Family Listings with a negotiation fee (primarily $5000 to the buyer) only FOUR were not under agreement.  This is good news for 3^rd party firms who negotiate and charge a fee to the buyer.  I realize this is a progressive type of listing, but the proof is in the pudding.  If buyers didn’t like the house, they likely won’t pay the fee, but only FOUR homes out of 28 were not under contract, which tells me buyers will 1) pay the fee if they want the house and 2) the house is priced right!!  Remember my old school agent from above?  Her $300,000 listing has been on the market for four months and is down $50,000 from where she started.  It is still not under contract. 

Most of our listings are under contract within 30 days.  This gives the opportunity to attempt to get the homeowner out of debt quicker.  I don’t understand why an agent would price a home at the top of the market.  This home will sit for a longer time on the market than necessary.

Buyers will pay a negotiation fee for work performed.  This fee should only be paid upon delivery of the deed.  NO ONE should be charging a fee up front, unless you are a lawyer.  I’ve had some question the fee which is why I wanted to blog about this.  For the naysayers out there, currently on the market 86% of short sales in Massachusetts with a negotiation fee are under contract.  So the buyer’s paying a fee is NOT an issue especially if the home was priced right.  Imagine if the home above was priced at $225,000 out of the gate?  I suspect that’s the price it needs to get to before it has some major activity. 

Don’t be scared of buyer paid negotiating fees.  It’s actually the best way to charge for a 3^rd party negotiation service.  We’ve been able to save agents a LOT more commission this way as other 3^rd party services charge the buying and selling agent.  Why give up MORE of your commission in a market where you’re working three times as hard for less pay.  It doesn’t make sense.

Thank you to all the amazing agents in New Hampshire and Massachusetts.  We wouldn’t be in business without you.

Maryann Little, VP Short Sale Mitigation
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http://massachusettsshortsales.net/
Massachusetts Short Sales
New Hampshire Short Sales

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When Your Massachusetts HAFA Short Sale Doesn’t Work!

Ugg…Another HAFA nightmare I encountered today. I’ve heard NOTHING , but negative news on HAFA. Every Realtor I’ve spoken with who is dealing with a HAFA short sale are not impressed. I’m sure you all read at this point that only 342 short sales and deed-in-lieu’s been completed have been approved and sold since HAFA’s inception last April-September. http://www.housingwire.com/2010/10/27/market-questions-sigtarp-numbers-on-treasurys-hafa-program - What I’d like to know out of that number is how many deed-in-lieu’s were performed for homeowners hopeful for a short sale.

Never would I claim to know all about short sales as the business is ever changing. I would caution you to run from someone who claimed they DID know everything as it is almost impossible. I am writing this today because I encountered a phone call from a homeowner today who asked me to buy his home.

Now Rapid Property Relief, LLC solely focuses on pre-foreclosure acquisition and negotiation so of course anytime a homeowner calls and asks me to buy their home in Massachusetts, it’s a win win for everyone. The problem with this particular short sale is the homeowner was enrolled in the HAFA program. We don’t actually purchase HAFA short sales as there is a lot to the program we don’t agree with, but the homeowner asked if he were to opt out of the HAFA program would we consider buying his property?

So there it was. That was the question I had to consider and didn’t know the answer too. The home was a condex, and typically we don’t purchase condos, but we will consider a condex if there are no condo fees and if more than 50% of the units are owner occupied, so his condex passed that one qualifier we had.
My next phone call was to his Realtor to introduce myself. I explained the homeowner wanted us to buy his property and what we did and how we did it. She was very open and genuinely wanted to work with us, but she started going over the timeframe for the short sale and some things didn’t add up.

HAFA allows you to sell your home for 120 days from the time they mail you the application. If you don’t sell in that timeframe, then they CAN exercise their right to perform the deed in lieu. This homeowner happened to just be a couple days past that mark. The homeowner had called and opted out of the program, however, now I was stumped. Would the lender allow us to do a traditional short sale after this expiration of the HAFA short sale?

To be honest, it’s too much effort to try for a short sale when at any given moment the lender can say NOPE, the property belongs to us now so it was important to find out if that would or could actually occur. No one wants to go into a short sale, knowing at any moment it would end because the lender took the home back. At least with a foreclosure, you know what deadline you are up against.

So I posed the question to the Realtor…Would the lender exercise their right to a deed in lieu if a traditional short sale was started? So at this moment I await the answer. When I find out, I will post back.

Maryann Little, Owner Rapid Property Relief, LLCPreforeclosure acquisition and negotiation Massachusetts and New

Hampshire Short Sales Massachusetts – Short Sales New Hampshire

Maryann Little, Preforeclosure acquisition and negotiation
http://massachusettsshortsales.net
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Don’t Under Estimate a Homeowner’s Motivation in Your Short Sale Success

Don’t Under Estimate a Homeowner’s Motivation in Your Short Sale Success

There are hundreds of reasons why a short sale may not close. There are far to many variables to list, but one of the biggest qualifiers for me when assessing whether or not we will work with a homeowner is their motivation factor.

It's dooms day in case you haven't noticed in Massachusetts and New Hampshire in the housing market. You can't open the Globe, Herald or Union Leader without seeing page after page of auction notices posted. It is overwhelming to say the least. Homeowners facing the loss of their home are struggling not just financially, but most likely physically, mentally, and possibly spiritually. This can take its toll in many different ways.
The problem becomes too much to bare for many homeowners. Many have to turn away. They can't face what's ahead. Unfortunately this lack of acceptance in their situation causes many to "ignore" the notices, the phone calls from the lender, the questions from credit companies, etc. Denial is a serious problem when a homeowner is facing the loss of their home.

There are cases when we cannot do our job because a homeowner becomes "unresponsive" - That will hinder not only our success in negotiating, but affect the sale of the property for the homeowner.
I have a strict rule that when I make an appointment to meet with a homeowner, that I don't travel to that house until I know that all of my paperwork is signed. That's one of the biggest indicators of motivation for me. If I have to chase a homeowner for paperwork, then it's likely they are in some sort of denial. I certainly understand how overwhelming the short sale paperwork is, which is why I like to give them plenty of time to get their packet together, but if on appointment day I call and they haven't filled it out COMPLETELY, I just set another appointment. It's important for me, and for them, to understand that this is just the beginning of the process and there could be times (maybe several) that I'm going to be in need of more paperwork, scheduling of appointments, etc., and that the sooner everything is completed the sooner we can get a response from the lender. A complete packet is a very good indicator of motivation for a homeowner which is one big peice of the short sale puzzle
.
Maryann Little, Preforeclosure acquisition
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Knowing your tax ramifications from Massachusetts or New Hampshire Short Sales

I had the excellent pleasure today to interview Joe Craft, CPA about the tax liabilities for short sales. Joe is an amazing accountant and our personal accountant at Short Sale Mitigation, LLC and Rapid Property Relief, LLC. We felt it was important for homeowners to get this timely and valuable information as many 1099C’s are being generated this month and will affect certain homeowner’s tax returns.

Short sales are risky and scary for most homeowners, but being armed with valuable information regarding all possible outcomes usually sets homeowner’s minds at ease. The alternative is far more devastating than the risk of a short sale, but knowing ahead of time what you face assists homeowners and agents in making the best decisions possible.

You can download the 20 minute interview here. (PLEASE BE PATIENT AS IT’S ABOUT 8 MEGABYTES)

Short Sale Mitgation - If we buy a home for $125,000 in which the homeowner owes $200,000 and the lender says we “forgive the debt” what happens tax wise?
Joe Craft, CPA – Lender issues 1099C to borrower and to IRS to report the cancelation of the $75,000 debt and report that as income to the borrower.

Short Sale Mitigation- So this now becomes a tax liability? Depending on the situation?
Joe Craft, CPA – Potentially. There are a number of provisions that provide for that income NOT being taxable. If none of the provisions apply then it is taxable. Usually more common provisions cover it. Usually owner occupied homes or principal residences fall under the Qualified Principal Residence Exclusion which provides that any amount use to acquire the property, or any debt used to improve the property, then that debt is non-taxable. That law is in effect until 2012.

Short Sale Mitigation– Only purchase money applies? How about an 80/20 purchase or if the homeowner pulls out home equity?
Joe Craft, CPA – Let’s start with 80/20 – That can be traced to the purchase so that would not be taxable, but on the other hand if a homeowner borrowed against equity to satisfy other debt, i.e., credit card, that would NOT qualify. It must be to purchase or improve the property to qualify.

Short Sale Mitgation– So if the home equity was used to pay other debt, such as a car or credit cards, is there any other provision that a homeowner could qualify for so they won’t have to pay taxes on the line?

Joe Craft, CPA – Insolvency provision says the tax payer must be legally insolvent then their cancellation of debt income is non-taxable. So then the question becomes what is the definition of legally insolvent? So you would have to add up the value of the tax payers assets as of the date the debt is canceled or forgiven and then add up the taxpayer’s debts. If the debts exceed of the value of the excess, the debt would be non-taxable. So for example; On the date the debt is cancelled the taxpayer owns assets worth $500,000 and they have liabilities in excess of $650,000 (and this is all debt; car loans student loans, credit card, mortgage) then the first $150,000 of debt cancelation income is NON-TAXABLE.

There are other provisions that would help such as bankruptcy. No debt cancelation income is taxable when a homeowner is in bankruptcy. The first thing you look at is that.

Short Sale Mitigation – What if one spouse claims bankruptcy and the other doesn’t? Is the husband liable for taxes on the forgiven debt.Joe Craft, CPA – if none of the other provisions are applicable, then yes the husband would have to pay on the forgiven debt, but also they file jointly the wife then indirectly becomes liable for that debt as well.

You would want to explore them possibly filing separately.

Short Sale Mitgation– Massachusetts and New Hampshire are recourse states. These exclusions fall under the mortgage debt forgiveness act which is only in effect until 2012. Any thoughts on if it will be extended? Joe Craft, CPA – it’s tough to say. I wouldn’t base my planning around it being extended.

Short Sale Mitigation – What about a second residence? Homeowners immediately think that the forgiven debt is taxable. Is that true?
Joe Craft, CPA – Not always. You have to look at insolvency and other exclusions that may apply. If the residence is connected to a farm, or business, there may be a limited exclusion but those are uncommon. I would always look at insolvency.

Short Sale Mitgation – Is the 1099C generated in January of the following year?

Joe Craft, CPA – Yes and the IRS gets a copy as well.

Short Sale Mitigation – What about form 982?
Joe Craft, CPA – it attaches to the homeowners taxes. When they file their personal income tax, they must complete 982 to take advantage of any of these inclusions.

Short Sale Mitgation– What about a homeowner’s tax bracket?
Joe Craft, CPA – If any portion is taxable it’s taxed at their regular tax bracket.

Short Sale Mitigation – If a homeowner is considering a short sale in New Hampshire or Massachusetts, what is the first step they should consider regarding their taxes.Joe Craft, CPA – they need to see if any of these provisions apply. If they are filing bankruptcy, then they don’t need to go further. Is it my main home? Then I would determine which portion was used for purchase or improvement, and any remaining debt I would ask myself if insolvency would apply. Lastly, I would check if the farm or business provision would apply. They need to get with someone to try to arrive at a good possible scenario again

joecraft@joecraftcpa.com 812-641-0477
www.joecraftcpa.com www.joecraft.com

Maryann Little, Preforeclosure Acquisition and negotiation Short Sale Massachusetts and New Hampshire http://shortsalemitigation.net

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HIGHEST is not always BEST in Short Sales

There is a HUGE misconception in real estate that the highest offer on a short sale is always the best offer.   That is not always the case.  I say this as I have a unique perspective because our company BUYS and SELLS distressed assets.  I have personally experienced both sides of the coin. 

When it comes to short sales, typically investors will ALWAYS make the lowest offers, but the smartest investors DON’T make LOWBALL offers.  A smart investor knows that many lenders will take a percentage of the BPO price.  Most lenders I’ve worked with will take between 80-90% of what the BPO came in at.  (BPO is Broker Price Opinion which is ordered by the lender.  It could also be an appraiser)  Now this number CAN fluctuate.  I’ve seen lower and higher numbers. 

The numbers in the end have to make sense for the lender and there are MANY variables that affect that, such as PMI, a foreclosure date, how many payments the homeowner is behind, who the investor on the loan is, etc..

Short Sales are a different breed as there is negative equity affecting the seller’s judgment.  With a short sale, sellers most often weigh the value of the offer vs. the quality of the offer.  One of the biggest factors affecting this decision may be “time”.  In a traditional fair market value sale, a seller has all the time in the world to sell or may not even need to sell.  They can wait for the highest offer to be presented, or they could take the home off the market and sell it next year when the market is stronger.  They have TIME to sell.  They are not under pressure from debt collectors, lenders, over leveraged credit cards, death, divorce, etc.  They can make a decision free of influence of hardship. 

A seller considering a short sale with limited time to accept an offer may easily choose a $150,000 cash offer free of contingencies that can close in a short time frame as opposed to a $200,000 offer with no or low down payment, government backed, in which they have a stringent appraisal/inspection process and or have to even sell their primary residence.  Keep in mind MANY lenders look at the same things when weighing the VALUE of an offer.   Many lenders are happy to get a non-performing asset off their books in the quickest way possible.

When I say we’ve experienced both sides of the coin, we have.  http://shortsalemitigation.net recently assisted us in negotiating a 4 unit property we were planning on selling to another group of investors.  We had two investment companies come forward to produce purchase contracts.  There was a $25,000 difference between contracts and we accepted the lower, because they could close quicker and offered cash.  Now it’s not that we didn’t want to NET more on the transaction, but the lower offer  was the  most QUALIFIED. 

It’s inaccurate to say highest is best.  No two offer s are alike and no two properties are alike.  Lenders do not think alike.  Some lenders approach waivers of deficiency with ease, and some lenders are much harder to convince and want to net more, then there are some that truly REVIEW a homeowner’s hardship and base their waiver on the homeowners current means.   Again there are several variables that affect short sale approvals so we can’t look at every short sale the same way and ignorantly assume that HIGHEST is always BEST in a short sale situation. 

Maryann Little Preforeclosure Acquisition and Negotiation

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