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Massachusetts short sale attorney

Short Sale Lawsuits Will Realtors Be Next?

by Bill Gassett on November 29, 2010 · 33 comments

Avoiding short sale lawsuits

Short sale Realtor Sued

There is no question that in this economic down turn we have experienced over the last five years or so that short sales and foreclosures have become part of our everyday Real Estate landscape.

Every week there are countless new short sale listings that hit the market in Massachusetts. In many of these short sales the seller, not understanding there is a big difference between a traditional Real Estate transaction and a short sale hires any ole Realtor® they happen to come across to represent them.

On the other side of the coin, there are also plenty of Real Estate agents that see the growing number of short sales coming available for sale and realize there is a lot of money to be made.

The problem however, is that many of these agents are flying by the seat of their pants and have done nothing to educate themselves on the ins and outs of closing a short sale.

As a Realtor® who has been successfully closing short sales for almost five years, this is one of my biggest pet peeves! How anyone can look a desperate seller in the face and take on a listing to sell their home with no short sale expertise is just beyond me. It pisses me off when I see a new short sale listing hit the market and know the agent has no track record with this type of transaction.

There are many Realtors® that are putting the noose around their own neck. In desperate times people do desperate things. The end result is that on many occasions consumers get very poor advice that can cost them dearly.

Realtors® that do not have short sale expertise could really do themselves a favor by referring the business out to an agent that is qualified to get the job done.

You may be wondering why this has become such a passion of mine? The answer is simple. Short sales have become stigmatized because there are numerous Real Estate agents and buyers that have been involved in deals where the listing agent did not know what they were doing. The end result for a number of different reasons is a sale that didn’t happen. This leaves a bad taste in everyone’s mouth. Going forward it makes it harder for the agents that do know what they are doing to find buyers for the short sales they are marketing.

Below I am going to touch on all the things you should look out for in trying to successfully complete a short sale whether you are in Massachusetts or another state.

Properly pricing a short sale

When you are short selling your home there is a good chance that you are not able to afford the monthly mortgage payments any longer. You may be just scraping by and know that next month you won’t have enough to pay your lender. When you decide to short sell your home and are no longer paying your mortgage pricing the home properly becomes critical.

The last thing you want to do is either over price or under price the home. For obvious reasons if you over price you will more than likely not be able to procure a buyer in a timely fashion.

If you under price the home and receive a contract from a buyer, the lender is going to reject the short sale after reviewing the appraisal or broker price opinion that they order.

Both of these scenarios can leave you with nothing and that much closer to a foreclosure. A short sale should be aggressively priced such that you will find a buyer in a timely fashion but not so low the lender is going to reject the short sale contract.

The short sale contract

There are numerous Realtors® that are clue less when it comes to giving sellers advice on the short sale Real Estate contract. Lets get one thing straight right off the bat….. When a seller signs a Real Estate contract it is almost always legal and binding as to the terms and conditions in the agreement.

Here are 4 short sale contract issues you need to be aware of:

  • Realtors® submitting multiple unsigned offers to your lender
  • Realtors® submitting low ball offers to the lender
  • Realtors® allowing home inspection contingencies after short sale approval.
  • Realtors® allowing an investor to negotiate the short sale
  1. When a Realtor® submits an unsigned offer to your lender YOU do not have a legal and binding contract. The buyer can walk at any point in time with no consequences to them! Does this benefit a seller in anyway? The answer is NO NO NO!  The Realtor® you hire should be looking to lock up the most qualified  buyer who stands the greatest chance of getting to the closing table.
  2. If you sign a low ball offer you stand an equally strong chance that the lender is going to reject your offer and send it back. If you accept an offer that is no where near the market value do you really expect the buyer is going to agree to the price the lender wants? Not likely and again you will be back at square one after being off the market for an extended period of time.
  3. Allowing home inspections after the short sale approval is another big mistake. Do you really want to have your home off the market for months, get a short sale approval from your lender and then find out the buyer wants to back out due to inspection items? Don’t let the blind lead the blind. There is no reason for letting a buyer have home inspections after short sale approval. I find most buyer’s agents think they are protecting their client by trying to save them from spending a few hundred dollars. WRONG – what the buyer’s agent is preventing is the buyer from negotiating a pricing discount if there were issues discovered. Lenders DO NOT negotiate home inspections issues after short sale approval.
  4. Letting a buyer negotiate for a seller is clearly foolish. The investor only cares about the seller if they get the terms THEY want.  An agent who lets an investor take over a short sale transaction is asking for a lawsuit. Realtors should not let investors negotiate a short sale!

Short sale negotiations

Short sale negligence

This is clearly an area where you will see most of the lawsuit’s against Realtors®. There are agents who are engaging lenders in the negotiations of short sale approval but don’t have the knowledge and understanding of either short sale debt release and/or short sale tax ramifications.

Who do you think will get sued if a seller receives a 1099-C or 1099-A at the end of the year or gets stuck with a deficiency judgment by their lender(s) at some later date in the future and they were not informed up front about it?

There are many Realtors® who have negotiated short sales that misrepresented to their client that the short sale approval letter removed the short sale deficiency when in fact it did not.

Realtors® are supposed to abide by the Real Estate Code of Ethics but clearly there are many who’s judgment is clouded by the almighty dollar.

The Code of Ethics clearly states:

Article 11  Realtors® are knowledgeable and competent in the fields of practice in which they engage or they get assistance from a knowledgeable professional, or disclose any lack of expertise to their client.

Article 13  Realtors® do not engage in the unauthorized practice of law.

Speaking of giving legal advice, there are Realtors® who are guilty of telling their client to stop paying the mortgage to complete a short sale. While this may be the proper advice in 9o-95% of most circumstances with short sales what if the sale falls into the 5-10% where stopping payment was not necessary?

Most major lenders may require payment stoppage but some of the smaller lenders do not have that guideline. Telling a seller to stop paying the mortgage could have serious consequences on their credit that could have been avoided. Again Realtors® should not be giving this kind of advice. It should come from a lawyer.

The take home message here is to make sure you do your home work when hiring a Realtor to represent you in your short sale!

I am successfully completing short sales through out the Metrowest Massachusetts area. As of this writing for almost four years, knock on wood, I have a 100% success rate for short sale approval! I work hand in hand with a local short sale Real Estate attorney who knows how to get short sales done! I will admit there is some luck involved in my success rate but the team I have put together does a stellar job.

If you are outside of the Metrowest Massachusetts area or even in another state 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 has an understanding of the short sale process! I have referred numerous short sales to other Realtors all around the country.

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About the author: The above Real Estate information on short sale lawsuits will Realtors® be next 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: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

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When To Do a Short Sale Home Inspection

by Bill Gassett on July 13, 2010 · 39 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: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

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Short Sale Tax Consequences

by Bill Gassett on May 10, 2010 · 31 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, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA. 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: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

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Make Sure You Get Your Massachusetts Short Sale Debt Released!

by Bill Gassett on April 16, 2010 · 14 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, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.  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: Ashland, Bellingham, Blackstone, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northboro, Northbridge, Shrewsbury, Southboro, Sutton, Wayland, Westboro, Whitinsville, Worcester, Upton and Uxbridge MA.

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

April 7, 2010

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 [...]

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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

The question of whether a home owner should stop making mortgage payments during a short sale is a popular topic for sure! 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 [...]

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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 →