Georgia Real Estate Voice

Bank of America Short Sales - I received some great news from Bank of America and their short sale department the other day.  As many of us real estate agents know, short sales can be a tedious task. In the past when doing a short sale with Bank of America and the buyer walked away, we had to start the process all over again, dragging out the time line and causing us to do a lot of repetitive and time consuming work. It wasn't any fun.

Bank of America has heard our complaints and they seem to be listening. Now when we are working a short sale, we have a buyer and the house is under contract, if that buyer walks away, we can now simply replace the buyer with our backup offer. By the way, a true backup offer has the 1 form in place that says if the current named buyer's contract falls apart, their contract becomes primary. If your buyer's agent isn't doing this, ask for it. It makes it more solid than simply telling the listing agent, "Hey, if that offer doesn't work out, please keep us mind!" Remember if your offer is a backup offer, make it a real one by submitting the proper documentation.

We are seeing a lot of short sales in our Cobb and Dekalb County real estate markets. As a buyer, if you are patient, you can get a great deal. As a seller, if you want to avoid a foreclosure on your credit report and are willing to fully cooperate with the people that are trying to help you, it can also be a good thing. 

In case you are wondering what a short sale is, that's when the bank agrees to take less than is owed on the property. The owner is the person that bought the home. They are the seller, not the bank. The owner is the one that signs that purchase and sale agreement, not the bank. The bank just signs the approval letter after reviewing the bottom line by getting a preliminary HUD-1 or settlement statement. That way they know what they will get at closing. A short sale seller does not and cannot get any proceeds from the sale of the home. The only way that can happen is if they go through the HAFA program because they have an FHA loan and then they could get up to a few thousand dollars for moving expenses on owner occupied homes.

There is so much to know about short sales, so I'll add a few things in:

1. If the seller doesn't sign the contract you are not under contract.

2. The bank is going to require that the seller sign the contract (purchase and sale agreement) to even consider the terms.

3. The contract should always have the short sale special stipulations in it or the Short Sale Addendum attached. Basically, it says that if the bank doesn't accept the terms, the seller doesn't have to sell.

I hope this information on short sales was helpful. If you are considering a short sale in Cobb county GA please contact Jen Bowman, Broker Associate and CDPE, (Certified Distressed Property Expert) with Keller Williams Realty Atlanta Partners at 404-456-5024.

p.s. Here's my little disclaimer. This is not to be construed as legal advice. It's my opinion and what I know. If you have legal questions, please consult your attorney. 

Tax consequences of a Short Sale - This question keeps coming up with home sellers inquiring about Atlanta short sales and the tax ramifications.  There seems to be lots of misinformation floating around.  While I am not a CPA, I looked this up after I heard that an accountant gave out information contrary to what we can read in simple English on www.IRS.gov.

If your mortgage debt is partially or completely forgiven (for example a short sale or foreclosure) during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income.   Instead of receiving a 1099 from your lender which shows taxable income, there will be a 1099-C. The C is for cancellation.

The home must be your primary residence. Investment property doesn't count. The forgiven debt on an investment property can still be taxable income.

Believe it or not, the IRS has broken it down into something that isn't hard to interpret. See more information from IRS.gov on the Debt Forgiveness Act of 2007.   It's a quick easy read.

If you are behind on your mortgage payments, know that there are options. A short sale is one of them.  Please don't wait until the bank has set a foreclosure date to contact an agent that specializes in short sales.  

If you have a home to sell in the metro Atlanta area, please feel free to contact me with your short sale questions. If I don't know the answer, we have a team of attorneys that do know.

Jen Bowman, Broker Associate, Certified Distressed Property Expert at Keller Williams Realty Atlanta Partners 404-456-5024.

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