Minnesota Short Sale Expert

Undoubtedly the number one question that I get when speaking to clients about possibly doing a short sale is whether or not they should continue to make their payments or not. This is an are that I am always careful and walk very lightly around because I am not an attorney and cannot give any sort of legal opinion or advice. That said, my answer every time is the same. I always say that anyone that is faced with this predicament should make sure that they can supply food, clothing and basic essentials for their family. They should also be sure to maintain their health insurance, car insurance and continue to make the auto loan payments. If there is money left to pay the mortgage then by all means do so. If it is a struggle to do this and the only way is to possibly pay some of these other essential items with a credit card then a decision needs to be made. 

Again, I will never advise someone NOT to make the mortgage payment but rather let them decide if it is in their best interest to do so based on the other bills that absolutely need to be paid. 

If you or someone you know is facing these challenges please do not hesitate to call me directly.

This topic is on the minds of many right now. With so many of us facing challenges keeping up on the mortgage payments the most common option is to look at possibly doing a loan modification. The federal government has come out with “plans” and the media is talking about them, but will they actually work for you..?? It would be great if there was a simple website that we could plug in some of our own personal and financial information and it would kick back an answer of yes or no.  But of course nothing is ever that easy.

The last figure that I saw is that over 85% of all loan modifications applied for never end up going through to be successful. This is very discouraging. Either the lenders are willing to do them or their not. Why take several months to make a decision that it is not approved..?? If the lender does modify the loan what is modified are the TERMS not the amount that you owe.

Most people think that their situation will warrant that the lender will accept the loan modification. After all they have been a great client to this lender. Maybe there has never even been a payment missed. The reality is that a loan modification has qualification guidelines that rival getting the loan in the first place. In many cases (not all) if one of the borrowers has lost a job and the income has gone down, they don’t qualify. This of course seems odd that they would not want to work with the borrower to keep them in this loan even if it means modifying it. The unfortunate reality is that if these homeowners are not able to modify they will be forced to take more drastic steps including selling it as a short sale or even letting it go back through foreclosure. These loan modification applications are taking several months to even get any answers which often times forces the homeowner to miss additional payments getting them into even a deeper hole.  

I would recommend looking at your options with doing a loan modification but NOT to get your hopes up that it will actually be approved n the end. If you see no other options please feel free to call me about your possibility of doing a short sale on your property.

I need to start off by saying that I am NOT an attorney and do NOT intend to offer any legal advice with this post. With that said, people ask me all the time what the effect or consequence a short sale will have on them with regard to having to pay taxes. it seems as though most that are in this position have heard that when doing a short sale in the past you were always taxed on the difference between what the bank accepted and what is owed on the property. This was indeed true…in the past.

In December of 2007 Congress passed a new bill called The Mortgage Debt Relief Act of 2007 that changed the rules as far as tax implications go when a homeowner has a debt that is cancelled. Please click on the above link to read all of the details regarding these changes but I will give you a “thumbnail” version of some of the basics that effect many that are looking to do a short sale.

If you have a primary residence that goes through a short sale that cancelled debt in most cases will fall under these new rules. You WILL receive a 1099C at the end of the year showing the amount of cancelled debt. However, when doing your taxes at the end of the year you will also need to fill out Form 982 which will be added into your return. This basically  offsets the 1099C that the lender sends you.

If the property was an investment property or second home the rules are different and often times (unless you can show that you were insolvent at the time of the cancelled debt) you WILL be responsible for the tax amount on the difference. Please keep in mind that there are many different options and scenarios with each of these cases and you should consult your tax advisor to determine how you will be affected.

We all realize by now that this is a great time to be a buyer  in this real estate market. But where do we find the best deals..?? Surprisingly it is NOT always in foreclosures as most may lead you to believe. In fact some homeowners that are selling what I refer to as a “regular” home are finally pricing them to sell and that means in the same range of what a similar foreclosure home might go for.

You do have options when searching for the “best” deal. These include of course the foreclosure properties but also the “regular” homes as well as short sale properties. Looking at each of these individually you need to ask yourself what sort of time frame you are dealing with and how soon you have to move into the new property. If you need to move in soon and really do not have time to wait then a “regular” home or foreclosure are the best ones to look at. However, if you are not in a huge hurry or can take your time then a short sale may offer a very good value.

If you decide to pursue short sale properties you should expect the process to take between 2-4 months before the approval comes in from the lender(s) and you close on the property. This may seem long but if you are willing to wait the deals can be very good. Compared to many foreclosure properties short sale homes often are in very good condition and may not need to have much if any money to be able to move right in. There are a lot of opportunities out there right now so it’s best to keep an open mind and look at each situation to see if it works for you. If it does make a move and put in an offer. 

Please feel free to contact me directly for assistance with any of your real estate needs or to simply ask questions. I can be reached anytime at 763-242-6303 or via email Rob@MnRealEstateTeam.com.

If you are reading this you likely know that right now is the best time in recent history to purchase real estate as an investment. If you are looking for the knowledge and help to do this please feel free to attend our FREE seminar on Tuesday April 21st to learn the do’s and dont’s about real estate investing.

We will explain how to purchase investment property as well as our team’s process of how we help our investors do this. There is NO obligation, NO contracts to sign and NO products that we sell you. The agents on our team all own investment properties and we are excited to share with you our experiences and the benefits that it has.

To register for this seminar please call me directly at 763-242-6303 OR email at Rob@MnRealEstateTeam.com.