A “short sale” may be a solution for homeowners who are struggling to make their payments or significantly upside down on the equity in their home. A short sale is when the loan holder(s) agree to sell the property for less than the outstanding balance of the loan. Short sales have grown in popularity for both consumers and banks or loan holder(s). They are less expensive to process than a foreclosure for the bank and they are usually less harmful to the home owner’s credit. We expect to see more short sales in 2013.
The recent passage of the American Taxpayer Relief Act of 2012 included a provision that is very important for home owners considering a short sale. The COD (cancellation of debt) provision was extended through the end of 2013. When a property is foreclosed or sold as a short sale, the amount of debt that is cancelled is considered income by the IRS. The amount is calculated by the total loan amount minus the net amount the loan holder(s) received from a short sale or bank-owned property sale. This amount of debt that was cancelled was previously considered income and the loan holder would send the home owner a 1099 to report as income. Senator Johnny Isakson led legislation to allow for an exclusion to this COD income so it would not be treated as income. This exclusion was extended for 2013 but is highly unlikely to be extended further. This is one of the reasons we expect to see a flurry of short sales coming in 2013.
Our company has established a solution called SHORT SALE ASAP. We have partnered with Weissman, Nowack, Curry & Wilco – one of the most respected real estate law firms in the nation. They are located here in Metro Atlanta and have set up a team that specializes in streamlined short sales. This is a complex area and the real estate agent is legally prohibited from negotiating directly with the bank on your behalf. That is why we established this partnership to help guide our clients through the process. There is no charge to the home owner for the service since the fee is funded by the loan servicer.
If you or someone you know would like to explore the option of a short sale or strategic default, contact us to learn more about the SHORT SALE ASAP program. Our goal is to efficiently and respectfully help people through this process so they can move on to the next chapter in their life. Call us at 678-439-6699 or email us at info@PetersenPartners.com.