Great News for People Who Did Short Sales in 2012 and 2013 in California!

Great News for People Who Did Short Sales in 2012 and 2013 in California!

Just got this great letter and had to pass it along!

December 4, 2013

Dear Robin,

The good news just keeps continuing.

As we anticipated, C.A.R. today received a letter from the California Franchise Tax Board (FTB), obtained by the State Board of Equalization, clarifying that California families who have lost their home in a short sale are not subject to state income tax liability on debt forgiveness “phantom income” they never received in a short sale.

Last month, in a letter to California Sen. Barbara Boxer, the Internal Revenue Service (IRS) recognized that the debt written off in a short sale does not constitute recourse debt under California law, and thus does not create so-called “cancellation of debt” income to the underwater home seller for federal income tax purposes. Following the IRS’s clarification, C.A.R. sought a similar ruling by the California FTB. Now with the FTB’s clarification, underwater home sellers also are assured that they are not subject to state income tax liability, rescuing tens of thousands of distressed home sellers from California tax liability for debt written off by lenders in short sales.

We are pleased with the recent clarifications issued by the IRS and the California Franchise Tax Board, which protect distressed homeowners from debt relief income tax associated with a short sale in California. We would like to thank Sen. Boxer and BOE member George Runner for their leadership in obtaining this guidance from the IRS and FTB. Distressed California homeowners can now avoid foreclosure or bankruptcy and can opt for a short sale instead, without incurring federal and state tax liability, even after the Mortgage Forgiveness Debt Relief Act of 2007 expires at the end of this year.

Sincerely,

Kevin Brown
2014 President
CALIFORNIA ASSOCIATION OF REALTORS®

Copyright © 2013 CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

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Obamo extends Deadline for Programs to Help Struggling and Under Water Homeowners in Livermore, the Tri-Valley, Bay Area, California and the United States!

Obama Administration Extends Making Home Affordable Program

U.S. Secretary of the Treasury Jack Lew announced today that Treasury is extending the Making Home Affordable Program for another two years. The new expiration date is set for December 31, 2015.

The program offers help to homeowners through solutions including the Home Affordable Modification Program (HAMP), Home Affordable Foreclosure Alternatives (HAFA), and the Second Lien Modification Program.

If you would like more information about these programs and how they may be able to help you or someone you know, just let me know and I will be happy to assist you.

Should I List My Home With an Agent or Sell it Myself as a For Sale By Owner (FSBO)?

Should I List My Home With an Agent or Sell it Myself as a For Sale By Owner (FSBO)?

Attention:  For Sale By Owners!  People Are Afraid To Buy From You!

Many homeowners believe that to maximize their profit on a home sale they should sell it themselves. They may even think that they have to sell the home themselves in order to avoid losing their home to foreclosure or short sale (if the latter is you, you may have options you are not aware of–contact me and I would be happy to discuss them with you).  At first glance, they feel selling a home is simple and why should they pay a broker fees for something they could do themselves?

However, in a previous poll of For Sale By Owner’s (FSBO’s),  close to half of the FSBO’s said that they would hire a professional next time they sold.  Thirty percent said they were unhappy with the results they achieved by choosing FSBO.  Why?

Many FSBO’s said that the time, paperwork and everyday responsibilities involved were not worth the amount of money they saved in commissions. For others, the financial savings were even more disappointing. By the time they figured the amount of fees paid to outside consultants, inspectors, appraisers, title lawyers, escrow and loan officers, marketing, advertising… they would have been better off having paid the broker’s fee which would have included many of these charges.

Selling a home requires an intimate understanding of the real estate market. If the property is priced too high, it will sit and develop a reputation for being a problem property. If the property is priced too low, you will cost yourself serious money. Some FSBO’s discovered that the lost money as a result of poor decisions outweighed the commission.

In addition, there are Many Reasons Why People Are Afraid To Buy From You as a FSBO!

Before you decide to sell FSBO, consider these questions and weigh the answers of assuming the responsibility versus employing a professional. A little time spent investigating up front will pay off tenfold in the end.

 

Questions To Consider:

 

Do I have the time, energy, know-how, and ability to devote a full forced effort to sell my home?

One of the keys to selling your home efficiently and profitably is complete accessibility. Many homes have sat on the market much longer than necessary because the owner was unwilling or unavailable to show the property. Realize that a certain amount of hours each day is necessary to sell your home. Listing with an agent allows your time to be freed up to do what you need to do and for your agent and others to show your home when a ready, willing and able buyer would like to see it, even when you are not home or available. The more exposure your home has, the more offers you will get and the more money you will likely receive for your home. Limiting showings will also limit the number of offers and the amount of money you will be able to get for your home. The cost of hiring an agent is often less than the amount of money you will lose by limiting the showings and offers by doing it yourself.

Am I prepared to deal with an onslaught of buyers who perceive FSBO’s as targets for low balling?

One of the challenges of selling a home is screening unqualified prospects and dealing with lowballers. It often goes unnoticed… how much time, effort and expertise it requires to spot these people quickly. Settling for a lowball bid is usually worse than paying broker commissions.

 

Am I offering financing options to the buyer? Am I prepared to answer questions about financing?

One of the keys to selling, whether it’s a home, a car… anything, is to have all the necessary information the prospective buyer needs and to offer them options. Think about the last time you purchased something of value, did you make a decision before you had all your ducks in a row? By offering financing options you give the home buyer the ability to work on their terms and open up the possibilities of selling your home quickly and more profitably. A professional real estate agent will have a complete team, from lenders to title reps for you to utilize…they’ll be at your disposal.

Do I fully understand the legal ramifications and necessary steps required in selling a home?

Many home sales have been lost due to incomplete paperwork, lack of inspections or not meeting your states disclosure laws. Are you completely informed of all the steps necessary to sell real estate? If not, a professional would be a wise choice.

 

Do I have the capability of handling the legal contracts, agreements and any disputes with buyers before or after the offer is presented?

Ask yourself if you are well versed in legalese and if you are prepared to handle disputes with buyers. To avoid any disputes it is wise to put all negotiations and agreements in writing. Many home sales have been lost due to misinterpretation of what was negotiated.

 

Have I contacted the necessary professionals… title, inspector (home and pest), attorney, and escrow company?

Are you familiar with top inspectors and escrow companies? Don’t randomly select inspectors, attorneys, and title reps. Like any profession there are inadequate individuals who will slow, delay and possibly even cost you the transaction.

 

Am I willing to work with Buyer’s who have a real estate agent?

Most serious and qualified buyers work with real estate agents. Those who don’t are usually investors and/or are looking to get a good deal on a home. Allowing real estate professionals to show your home to their buyers will allow you to maximize exposure of your home to more buyers and to buyers who are willing to pay fair market value and sometimes even a little more for a home.

Am I expecting a buyer to pay me top dollar for a home and pay their agent’s commission if they have an agent?

Some FSBO’s say they will allow buyers with agents to see their home and to submit offers. However, they expect the buyers to pay their agent’s commission and to do all the paperwork. Let’s take this in two parts: Commission and Paperwork.

Commission

If the goal is to get the highest price possible for your property, you cannot expect a buyer to pay you top dollar for a home and to pay a commission to their agent which is typically taken from the seller’s net proceeds from the sale price of the home. Expecting a buyer to pay top dollar for your home and pay commission is not reasonable when they can by a home comparable to yours for less money since paying the commission on top of the purchase price is not common practice and would in essence make them pay more for your home than it is worth. When looking at homes that are listed by agents, buyers know their offer price includes the commissions that will be paid by the seller. If a home is not listed by an agent, a buyer would expect to pay less for a home, not more which is what they would be doing if they paid listed home market value for the property and the commission. If buyers are to pay commission, then they would expect to pay  listed home market value minus commission amount for the property.

 

Paperwork

Aside from the Buyer writing the offer (which they typically need an agent to help them do unless they are very experienced buyers like investors) and responding to any counter offers, the required paperwork in a transaction is the seller’s responsibility to complete and obligation by law. There are certain disclosures that the sellers must complete and provide to a buyer before they can legally sell and transfer a property to a buyer. If the seller does not complete and provide the necessary disclosures, a buyer can later sue the seller for non-disclosure and other reasons. Having a agent on your listing side protects you as the seller to make sure all the required paperwork is complete and the agent’s Errors and Omissions Insurance helps to insure you will not be financially liable for items that were not disclosed due to the agent not providing the correct paperwork.

Buyers typically like to have their own agent involved so that they have the peace of mind that the contract will be written and negotiated as well as possible, that they are advised on the types of inspections it would be prudent to have for a property and also so that they are provided with all the necessary disclosures. Buyers typically want a seller to have a listing agent involved just in case there is a reason for a law suit in the future. Typically, an agent’s E&O insurance coverage is a lot higher than an individual seller’s bank account. What I mean by that is that if a buyer were to sue a seller, a seller does not have any insurance coverage for selling their home, so if something is done incorrectly or not disclosed, then the buyer really has a low likelihood of getting fully reimbursed for the issue directly from the seller. Typically, it is an agent’s E&O insurance that pays out claim settlements. Because of this and the reasons stated above, Many People Are Afraid To Buy From You!

If these questions raise some concerns you may want to speak with a professional. I sincerely hope these tips, information and ideas are of value to you. If there is any way I can be of service just let me know. I am a very experienced real estate Broker. I If you would like a FREE consultation, send me an email through this site or call me at: 925-577-8692. 

Your friend n Real Estate, Robin Watson-Bird

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Should I Short Sale My House in Livermore, Danville, Pleasanton or the Tri-Valley Bay Area Now or Wait?

Should I Short Sale My House in Livermore, Danville, Pleasanton or the Tri-Valley Bay Area Now or Wait?

I have had many people ask me whether they should short sale their house in Livermore, Danville, San Ramon, Dublin, the Bay Area, Tri-Valley Area of California now or wait until the market improves and do a traditional sale.

Well, based on the real estate trends, mortgage lending history, and economic condition of the state, it is probably going to take another 7-10 years for the market to begin to turn around and recoup some of the home value you have lost, and there is no guarantee that in that time your home will even reach the price you paid or owe  if your purchased your refinanced home to get equity out between 2004 and 2007.

If you are in a bad situation and you owe more money on your home than it is worth and you can no longer afford to make the payments on the property, or you have another reason that you need to move out the home or sell it (for example, job relocation, medical condition that does not allow you to climb stairs and you own a two story home, etc.—lots of many possible scenarios), then you will want to get your home listed ASAP so you can get an offer, the short sale processed and the transaction closed BEFORE the end of 2012.

The typical lender takes 30-90 days to process a short sale once you have an offer which could come right away or take 30+ days to get. Then there is a 30 day escrow period for the buyer to complete their inspections, get their loan in place and close the transaction. So, on an average transaction, you are looking at 3-6 months from start to finish. Depending upon the type and price range of property you have, the desirability of your neighborhood, and who your lenders are, it could take you a year or more to get through the short sale process, so do not wait.

What’s the rush?

The reason you will want to list right away rather than wait is because

The Mortgage Forgiveness Debt Relief Act and Debt Cancellation ends at the end of 2012!

According to the IRS website, http://www.irs.gov/individuals/article/0,,id=179414,00.html

 “If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.”

“The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence.”

 This means that if you short sale your primary residence, then you should not have to pay taxes on the forgiven debt!

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married 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.”

Since the Act is set to expire at the end of 2012 and so far, I have not heard talks of extending it, probably due to the fact that the country needs the tax money, NOW is the time to short sale if that is the route you are considering taking. If you miss the end of the 2012 calendar year deadline and they do not extend the act, you may end up being responsible for paying taxes on all of the forgiven debt on your home if you short sale later or even let it foreclose. Yes, if you let you home foreclose, you may still owe taxes on the property.

Most people cannot afford to pay taxes on an extra $100,000 or more of  “income,” especially when that income is only on paper via the 1099 that the lender will issue to you and not actual money deposited into your account.

I have been listing and processing short sales for 5 years, before most agents even knew what they were, and have successfully closed so many short sales that I have earned the designation of Short Sale Genius Elite Master. I am also HAFA certified so that I can assist people who qualify for the HAFA program short sale their homes and receive up to $3,000 to assist with moving costs.

I have been doing short sales so long that I have already started helping past short sale clients purchase new homes!

I provide free short sale consultations for people who are considering short selling their home or investment properties. Whether you just want to learn more about what a short sale is, what some of the alternatives you may have to doing a short sale, or if you are ready for us to meet for me to list your home, I would be happy to talk to you. Feel free to give me a call at 925-289-1432 or send me a message through my blog and I will be happy to discuss your situation with you.

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FREE Loan Modification Help Available from NACA–Save the Dream Tour is Happening Right Now in Los Angeles

I have blogged about NACA in the past–they are the organization that was able to get me and several people I know and thousands of others great loan modifications after our banks had already denied us…and they did it for FREE! They saved me about $1620 per month!

If you only own one property (the American Dream), or one property that has a mortgage on it, then NACA may be able to help you too.

You can attend one of the events like I did or you can do the process online and/or via one of their local offices; Oakland is the closest office to the Bay Area.

From what I have heard, people have the best success by attending the events. A “same day solution” may take 2-3 days to actually happen because of the large number of people who attend the events in person, but it is well worth all the time sitting and waiting, and overnight expenses if they are able to help you. I suggest taking food and drinks in with you so that you do not haveto pay the high food prices and eat junk food while you are there. Take a good book or something toread or do to occupy your time while you wait.

If your loan is owned by the bank you make your payments to and the bank is one that they work with, then you should have your modification terms before you leave the event, aka your “same day solution.” If your loan is only serviced by the bank you write your check to, and is actually owned by an investor or group of investors, then they can write up a proposal of new loan terms that represent an affordable mortgage solution for you and get them submitted to your lender, but you will usually have to wait 30-45 days or so to see if the investor(s) who own(s) your loan will agree to the changes.

From the NACA.com website:
“NACA’s historic Save the Dream Tour has been an incredible success with hundreds of thousands of participants. Thousands of homeowners received same day solutions saving hundreds some over $1,000 a month. All of NACA’s services are FREE. Below are the cities we’re planning to host events in 2011.

Los Angeles, CA Jan 20-30L.A. Sports Arena

Phoenix, AZ Feb 3-7 Phoenix Convention Center

Jackson, MS Houston, TX Minneapolis, MN
Seattle, WA St. Louis, MO Denver, CO
Atlanta GA Kansas City, MO Long Island, NY
Miami, FL Oklahoma City, OK Baltimore, MD
Orlando, FL Lansing, MI Hartford, CT
Columbus, OH Memphis, TN Chicago, IL
Las Vegas, NV Pittsburgh, PA Raleigh/Durham, NC
Dallas, TX ”

Visit NACA.com to find out more.

If you go to NACA, I would love to hear your feedback!

If NACA cannot help you and you decide that you need to sell your home or you would like to know if you have other options you did not know about, my team would be happy to help you! You can contact me directly at 925-577-8692.

Good luck!

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