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Massachusetts short sale attorney

When To Do a Short Sale Home Inspection

by Bill Gassett on July 13, 2010 · 11 comments

Massachusetts short sale home inspection

In most Real Estate transactions there is a buyers agent representing a buyer and a sellers agent representing the seller. In a traditional purchase, the home inspection is generally done within the 1st week or two after a contract has been executed by both the buyer and seller.

This is know as a “home inspection contingency” and allows the buyer and their home inspector the opportunity to carefully look over the home for any potential structural or mechanical defects.

If the buyer does not like the results they generally can exercise their right not to move forward with the purchase of the property.

When to do a home inspection for a short sale property can sometimes be a bone of contention depending on which side you are representing in the transaction.

Buyers of course do not want to spend money on home inspections when they do not know for sure whether their short sale offer is going to get approved or not.  In many short sale offers I receive, the buyers agent will ask in the offer to let the buyer do their home inspection after the short sale approval letter comes from the lender.

As a Massachusetts short sale listing agent however, I need to protect my clients best interests.  Allowing a buyer to wait until after the lender’s approval to do a home inspection would give the buyer the ability to walk away far too late in the transaction and could force the seller into a foreclosure sale because they would not have enough time to find another buyer.

In addition most short sales are “as is” transactions. The reason the seller is doing a short sale to begin with is that they do not have enough money to continue paying the mortgage. Buyer’s need to understand  going in that the home inspection is not going to be an opportunity for them to present a laundry list of repairs they want the seller to remedy.

Lastly, the buyer is not going to be able to negotiate any costs of repairs if the home inspection was completed after lender’s approval. When the lender or lenders approves a short sale it is based on a definite dollar amount they will be realizing at the closing and they do not allow for further negotiations.

If the home inspection is done up front in a short sale it could be possible to negotiate a credit prior to the offer being submitted to the lender.

For all these reasons it makes sense that the home inspection is done prior to short sale approval!

Massachusetts short sale Realtor

As the number of Massachusetts short sales has grown so has the number of unqualified Realtors who have started to represent home sellers. If you are a Massachusetts home seller and need to do a short sale it is of the utmost importance to realize that not every Realtor is qualified to represent a short sale!!

Many consumers make extremely poor choices by working with agents that don’t have a lick of experience with getting short sales approved.  Picking a good Massachusetts short sale Realtor is critical to your success.

There are many errors I see constantly by agents who are representing sellers in short sales throughout the Metrowest area. If you are considering doing a short sale I would highly recommend reading some of the short sale articles I have written below. The articles cover some of the considerations as well as mistakes you want to avoid when trying to successfully complete a short sale.

As a home seller you need to remember that tons of short sales across the country do not get approved and end up in foreclosure. Sometimes this is due to the Realtor not properly handling the sale. There are also debt removal and tax consequences discussed below that you will want to be familiar with.

If you are needing to complete a  short sale of your home or condo in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale, Hopkinton, Medway, Mendon, Milford, Southboro, Westboro, Natick, Northboro, Northbridge, Whitinsville, Upton, Uxbridge, Shrewsbury, Worcester, or Douglas Get in touch! I would love to interview for the chance to represent your best interests.

I am successfully completing short sales through out the Metrowest Massachusetts area. So far, knock on wood, I have a 100% success rate for short sale approval!

If you are outside of the Metrowest Massachusetts area and need to do a short sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing! I have referred short sales to other Realtors all around the country.

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About the author: The above Real Estate information on when to do a short sale home inspection was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Medway, Franklin, Framingham, Grafton, Hopedale, Mendon, Upton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, Worcester and Douglas.

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Short Sale Tax Consequences

by Bill Gassett on May 10, 2010 · 9 comments

Short Sale Tax Consequences

As a Massachusetts Realtor that has been doing quite a few successful short sales, one of the things I like to make sure of when I meet a potential client that is looking to do a short sale is to give them a complete understanding of how they work.

Short sales can be complicated transactions. Anyone who regularly participates in short sales knows that almost every single transaction is different. Every lender has their own set of rules on how they go about completing a short sale.

One of the things in particular that I feel is extremely important to educate a seller doing a short sale is the tax consequences. There are different sets of rules regarding short sale tax liability depending on whether or not the home was a primary residence or not.

If you are selling your primary residence as a short sale, The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt. The debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a short sale or foreclosure, qualifies for the relief granted.

The Mortgage Debt Relief Act applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion or $1 million if married but filing separately. The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition. This act was put in place for the specific purpose of helping home owners avoid the financial hardship caused by doing a short sale.

Prior to this relief act being put in place the IRS would treat the forgiveness of a debt as taxable income. The logic behind this is when you take out a mortgage there as an assumed obligation that you will be paying it back. When money is borrowed, the borrower is not required to include the loan proceeds as income because the borrower has to pay back the loan. When the obligation to pay back the loan is removed, the amount of the proceeds the buyer received becomes reportable as income because there is no longer an obligation to repay.

When there is a cancellation of debt, the lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt. Eligible home owners also must complete IRS form 982 which must be included with the Federal tax return to claim the mortgage relief.

If you are selling a property and it is not your principle residence you will be paying taxes on the short sale deficiency that is forgiven!

Short sale debt removal

This is obviously a key consideration when determining whether doing a short sale is the right move or not.  Debts forgiven that do not fall under the debt relief act include rental properties, business properties, 2nd homes and car loans. Credit cards also do not apply unless you were insolvent just prior to the cancellation of debt.

The most common situations when the cancellation of debt income is NOT taxable include:

  • Qualified principal residence indebtedness: This is the exception created by The Mortgage Debt Relief Act of 2007 and applies to most homeowners.
  • Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
  • Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total liabilities exceed the fair market value of your total assets.
  • Certain farm debts: If you incurred the debt for the purpose of running a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.
  • Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. In other words the lender is not allowed to pursue you personally in case of a default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.

Whenever I am dealing with a short sale and there are tax questions, I always recommend speaking to a qualified tax professional or attorney who is well versed in these matters.

One of the other things I would pay careful attention to is getting your Massachusetts short sale debt discharged. There are a lot of Realtors who are doing short sales and do not have a clue about debt release. You do not want to get caught with your pants down on this! Having a collection agency chase you for unpaid debts is probably not a pleasant experience!

Related Real Estate articles:

If you are needing to complete a  short sale of your home or condo in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale, Hopkinton, Medway, Mendon, Milford, Southboro, Westboro, Natick, Northboro, Northbridge, Whitinsville, Upton, Uxbridge, Shrewsbury, or Douglas Get in touch! I would love to interview for the chance to represent your best interests.

I am successfully completing short sales through out the Metrowest Massachusetts area. So far, knock on wood, I have a 100% success rate for short sale approval!

If you are not in the Metrowest Massachusetts area and need to do a short sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing!

_________________________________________________________________

About the author: The above Real Estate information on short sale tax consequences was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Mendon, Upton, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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Make Sure You Get Your Massachusetts Short Sale Debt Released!

by Bill Gassett on April 16, 2010 · 9 comments

Massachusetts Short sale debt
If you are an avid reader of my Massachusetts Real Estate blog you probably have guessed that one of my passions is to help out those that are in need of completing a short sale.

Massachusetts home owners struggling to make mortgage payments are often turning to doing a short sale as a means of escaping their debt.

If you are not familiar with the term, a short sale is when a bank or mortgage lender agrees to discount a loan balance because of a financial hardship on the part of the borrower. The home owner sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds from the sale to the lender.

One of the most important considerations when pursuing a short sale of your Massachusetts home is to make sure that the debt has been canceled!

As a Massachusetts Realtor that has been representing a number of home owners in a short sale, I can tell you there is always a sense of great relief when a short sale approval comes from the bank. Often times it is months of waiting and the uncertainty can wear on anyone that has gone through the process. Short sales are anything but short!

For the past few years I have been successfully completing short sales all over the Metrowest Massachusetts area. So far the success rate has been 100% for short sale approval. Given the fact that nationally the success rate is very low, this is an accomplishment I am proud of.

All of my short sales are completed with the help of a local attorney who works with me during the short sale process. The relationship has been tremendous and my seller clients have been the beneficiaries of our team work.

One of the things I have been able to count on is the fact that the attorney has gotten a release of debt from the lender.

This point is crucial for you to understand because there are lots of Realtors out there who are representing sellers in short sales that do not know anything about debt removal.

Short Sale Debt Removal

What has been coming to light recently is that a number of lenders are selling unpaid mortgages to collection agencies which in some states have years to come after you for a collection of this unpaid debt. Some of these collection agencies have been able to win court judgments where they can collect through repayment plans and even garnish your wages if necessary!

Can you imagine hiring a Realtor to get a short sale approval for you only to find out years later that there was no release of your debt. I am sure you would not be a happy camper!!

These short sales where the debt has not been released is opening up opportunities for companies and investors that specialize in preying on people who did not know any better. This is big business and is known in Real Estate circles as “scratch and dent”.

There is some relief in sight for some folks under the new Home Affordable Foreclosure Alternatives Program (HAFA) that started April 5th. This new short sale program aims to prevent banks that hold second-lien loans from pursuing collections from homeowners after the short sale.

Under this HAFA program sellers will receive notice that their service company has steered part of the sales proceeds to secondary lien holders in exchange for release and full removal of their liens. It is important to understand however, that this release would apply only to short sales done through the Home Affordable Foreclosure Alternatives program. Not all lenders will be participating in this program.

Above all else if you are doing a short sale make sure your representative gets the lender to sign off on a complete removal of debt on your property!

If you are considering a short sale here are some other short sale articles I have written that would be worthwhile to read:

Massachusetts Short Sale Realtor Mistakes to Avoid

Massachusetts Short Sales

Questions to ask a short sale listing agent as a buyer

Stop Making Mortgage Payments During a Short Sale

Do you need to complete a  short sale of your home or condo in Ashland, Bellingham, Framingham, Franklin, Grafton, Holliston, Hopedale, Hopkinton, Medway, Mendon, Milford, Southboro, Westboro, Natick, Northboro, Northbridge, Whitinsville, Upton, Uxbridge, Shrewsbury, or Douglas? Get in touch I would love to interview for the chance to represent your best interests.

I am successfully completing short sales through out the Metrowest area. So far, knock on wood, I have a 100% success rate for short sale approval.!

If you are not in the Metrowest Massachusetts area and need to do a short sale please feel free to contact me and I would be happy to refer you to a Realtor in your location that handles short sales and knows what they are doing!

_________________________________________________________________

About the author: The above Real Estate information on Massachusetts short sale debt removal was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Mendon, Upton, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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Questions to Ask a Short Sale Listing Agent as a Buyer or Buyers Agent

by Bill Gassett on April 7, 2010 · 7 comments

Failure or success in a Massachusetts short sale

There is no doubt that a short sale is not your run of the mill Real Estate transaction. Anyone who has ever been involved with one as a listing agent knows there are a lot of hoops to jump through! On a national level there is a very high percentage of short sales that never make it to closing.

If you have ever gone online and done any research on short sales you are bound to see articles and blog posts written blaming the lender for any number of things. In many circumstances the Realtors, sellers, and buyers that are complaining have a right to be angry.

There are however, a number of cases where the reason the transaction does not fly is because of the sellers REALTOR! Unfortunately there are a number of Realtors that have never  done a short sale before and have limited knowledge of the process yet are taking listings from home sellers that do not know any better. What is so sad about this is that the seller will usually be at foreclosures door step without getting a successful short sale done.

If you are a buyer or a Real Estate agent representing a buyer I am going to give you some interview questions you should ask the short sale listing agent in order to determine if you have a legitimate shot of getting the short sale completed.

If you are a Massachusetts homeowner and need to do a short sale I would encourage you to read picking a Massachusetts Short Sale Realtor and need a Massachusetts Short Sale Realtor besides the questions below.

Are you going to be negotiating the short sale for the sellers or is there an attorney or short sale specialist involved?

If the answer coming back on this one is the Realtor is going to be representing the seller you MUST find out if they have ever successfully completed a short sale transaction before. If the sellers Realtor has never done a short sale before you might as well have your buyer move on to another home! The probability of the sale ever getting to the closing table is slim. If they have completed a short short sale before ask them their success rate. In other words of the short sales they have listed, how many did not close?

Have you requested the short sale package from the lender and has the seller filled it out?

In order to complete a short sale every lender requires various documents that must be filled out and returned to them. They include:

  • A completed authorization form allowing communication directly with the lender.
  • The lenders name, account numbers, and customer service phone number.
  • A hardship letter discussing the exact reasons why you are not able to pay the mortgage going forward. This letter must be dated and signed.
  • A copy of the listing agreement from the Real Estate agent.
  • Proof of income ~ The lender is going to require a financial statement including copies of your two most recent bank statements, copies of your last 4 pay stubs, or if you are self employed, a copy of your most recent profit and loss statement. Lastly, you will need copies of your last two tax returns.
  • Also are there any other debts on the home or condo such as past due water and sewer bills, condo fees, outstanding taxes, IRS or other liens.

Who are the lender/lenders servicing the loan?

This is a basic question that they better know the answer too. You need to ask them their experience with this particular lender. There are some lenders that are very difficult to deal with most notably Bank of America (BOA). If BOA is servicing the loan you expect to be on the longer side of getting to the closing table. It is not crazy to think the transaction could take 6-12 months. I know you are probably thinking to yourself how is this possible? Believe me it is!

How many loans are on the property?

If there is more than one loan the transaction is more than likely going to be harder to complete. The agent is now going to need to have negotiation skills beyond just dealing with one lender. When there are two lenders both need to be satisfied. There are some lenders that will only allow a 2nd mortgage holder to get X amount of dollars. The agent representing the seller needs to know how to get past any difficulties that could arise between disagreements with the two lien holders.

How is the listing agent going to handle submitting offers to the bank?

Clueless Massachusetts short sale Realtor

This is an extremely important question to ask. The correct way to handle a short sale transaction is to have the seller sign an offer that makes sense and submit that to the lender. It should be no different than any other sale. The seller owns the home and they either accept or reject an offer that comes in.

If the listing agent tells you that they will be collecting offers and submitting all of them to the bank you might as well tell your buyer client not to get involved. This is a very big red flag! It shows that the agent is clueless and has no idea how to correctly represent a seller in a short sale. Without a signed offer neither the seller or the buyer has a contract. There is no obligation on the buyers part and the seller could be left with nothing. The bank does not want to be in a position of reviewing multiple offers either.

The other mistake I see short sale sellers agents making is submitting any offer to the lender for approval whether it makes sense or not. One thing you need to understand is the lender is not going to accept a short sale if the accepted sale price by the home owner is way under market value. The offer amount submitted to the lender needs to make sense! The lender will send out an appraiser to verify the value and if it does not meet the parameters it will be rejected.

How far away is the owner until foreclosure proceedings?

You obviously need to find this out for the sake of your buyer. There is no point in them spending money on inspections, lenders fees and other things if the sale is going to end up in foreclosure. Someone representing a seller in a short sale is going to need to make sure that foreclosure proceedings are put on hold.

These are just a few but very important questions that could help you determine if you have a shot at getting short sale approval. Ideally I would tell you that if an attorney with short sale experience or other type short sale specialist is handling the sale you probably have a better shot at getting the deal done.

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About the author: The above Real Estate information on questions to ask a short sale listing agent as a buyer or buyer’s agent was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Upton, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

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Need a Massachusetts Short Sale Realtor? Don’t Pick a Short Sale Buffoon!

March 24, 2010

One of the biggest mistakes I see being made over and over again by those that need to short sell their Massachusetts home is picking the wrong Real Estate agent to work with. Don’t make this mistake and turn into Realtor road kill! The are an abundance of Realtors that are listing short sales and [...]

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Stop Making Mortgage Payments During a Short Sale?

February 18, 2010

There are a lot of myths floating around when it comes to successfully doing a Real Estate short sale. One of the more prominent untruths is the fact that you need to be in default with your lender in order to do a short sale. On numerous occasions both online and around the water cooler [...]

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Picking a Massachusetts Short Sale Realtor

February 16, 2010

Over the years there have been plenty of times I have seen consumers make poor choices in picking a Realtor to represent them in the sale of their home. If the Real Estate market is booming making a bad selection can be less of an issue. Going back to the beginning of the decade all [...]

1 comment Read the full article →