I would like to comment on your article entitled “Selling the Market Short” in which the writer attempted to warn the public of the result of selling their home via the Short Sale option. While I appreciate the media attempting to keep the public well informed, in this case it was your article that fell “short.”
While your article is correct in stating that home owners can be, and most times are, sent a 1099 form in the amount of the “forgiven amount”, it is also important to provide information about the Foreclosure Tax Relief Act of 2007 (H.R., 3507) that was passed in December, 2007, and was designed to allow forgiveness of the Federal income taxes that are due as a result of selling your house “short.”
While I am in no way offering legal advice, and recommend that anyone who is considering a short sale consult with an attorney and tax accountant, I can say that the Act provides Federal tax relief for those who, during tax years 2007, 2008 and 2009, choose to short sale their primary residence and who receive a 1099 form for the difference in what they owe and what the bank accepted as payment. As of this date, there is no similar relief for investment properties or second homes, and is not applicable on a State tax level.
If people are considering selling or purchasing a home through the Short Sale process, I would highly recommend they hire a real estate agent who is experienced in these difficult transactions. Also, I think it is important to note that avoiding the sheriff’s sale can help in reducing the long term effects that foreclosure can have with regard to future credit and credit scores. If anyone in foreclosure would like more information regarding short sales, I would recommend sitting down with your attorney, accountant, and with a real estate professional who specializes in such transactions.
For more information on the Foreclosure Relief Act of 2007, you can visit www.govtrack.us
Marcia Hilber, Broker
This article appears in May 29 – Jun 4, 2008.
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It comforts me that you and your fellow brokers made money driving prices through the roof (“buy now before the prices go even higher”) and that you are also there for those who took the bait. Don’t tell me, “Theres never been a better time to buy!”
I appreciate the comment, which I’m taking as a compliment, about being here for people who are now being affected by the plummeting real estate values, combined with bad loans.
While I did start out in real estate as an investor, it was not until after the real estate gold rush that I got my license. All my listings are representing people who are being faced with foreclosure and whose homes are being sold under the short sale option. What that can mean for those of us who are aiding sellers through this process, is that we may or may not get paid for our time. That part is up to the bank with which we are negotiating. Those easy real estate commissions are a thing of the past, at least for now.
It may have made it easier for me had I had the benefit of the raving market in 2004, 2005, as making a living and paying our bills are still things we all have to do. But some of us are in this business because we love helping people, which is why myself and many of the agents I work with take on these difficult listings.
I really feel for the position many homeowners and investors have found themselves in, and it’s good to see programs that are helping many of these folks who have been affected.
To my dismay learning of a real estate agent who is writing offers thru his extended families LLC’s is highly unethical and mimics insider trading as the realtor that holds the listings has first hand confidential information on the properties he is selling and then to use an LLC owned by his sons to make offers, not stating the principals of the LLC in the earnest money agreement is illegal and this broker will lose his license. I sent this off to the state of Oregon, the feds and have informed on this crooked scammer and I will bet he is out of work in about a month for good and is sued by the banks he represents in the “short sales”
We are in a housing crunch partially due to crooked people like value pushing appraisers, crooked real estate agents and lenders who lend out money to people who have a pulse as being the only loan requirement.