A homeowner who has $100,000 in mortgage debt forgiven through a short sale, for example, would have to pay income tax on the $100,000.
How Can a Seller Get More Money in Their Pocket Out of a Short Sale?
Is the subject of this blog even a possibility or are you thinking this is too good to be true!? Maybe you think this is a funny blog post? I am serious as can be! The question is, does your agent know this?
Everyone knows there are government short sale and internal bank-approved short sale programs that pay the seller anywhere from $3,000 to $30,000. This is NOT all the money a seller CAN get, there is more money in addition to what the bank will pay directly, and there are very nearly NO agents who actually know how to do this.
There are ways to accomplish this feat, whether through the proceeds approved by the bank to getting money paid from a buyer for liens ranging from: credit cards, child support, alimony, and home owner association dues just to name a few and lastly, there is personal property. Personal property can be sold at closing outside of escrow legally between a buyer and seller. State and federal tax liens can also be removed and funds applied as well, but usually are released with no money towards them in order to sell the property.
In the case of personal property, there would have to be specific circumstances for a seller to have optimum results and as always, I would recommend an attorney to draw up any paperwork. These certain circumstances could allow a sale for more than what their present value is, to accommodate a particular buyer in the case of multiple offers.
How does one get multiple offers on a property that is a short sale and get it approved by the lien holders at the price accepted by the seller with little to no market time? Only an agent with experience can do this, and if the seller needs more time in the property to recoup finances, then this also can be accomplished only with an experienced agent. Most agents out there use short sale negotiators and DO NOT have experience in handling your short sale because the actual negotiations with the bank are done before the offer is even submitted, based on the seller’s circumstances.
There are many facets to a short sale that can be done to the benefit of the seller, especially getting extra money that can legally be paid to or for the seller. A short sale negotiator’s only job is to submit paperwork to the bank for a hefty fee, while the listing agent just gives them and bank an offer. The listing agent should be setting up the sale by determining the hardship, even if they have assets or free and clear real estate in their portfolio, then setting up to pay down or off any other qualified debts. The question I get every day from agents wanting to know how to negotiate with buyers and banks for their specific situation is: why should only experienced agents handle these sales? I get referrals from other agents to handle their short sales.
Always ask your agent: How many short sales have you closed and negotiated on your own?
100 short sales closed and negotiated on their own should be the minimum bar requirements.
This is a very complex transaction; do you want a friend or relative for your agent or an EXPERT?
Are you facing this issue yourself? Please, give me a call and see what I can do for you! – John A Silva (619) 890-3648