What is a Short-Sale?
A short-sale is the sale of a house in which the proceeds fall short of what the owner still owes on the mortgage. Many lenders will agree to accept the proceeds of a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments. By accepting a short sale, the lender can avoid a lengthy and costly foreclosure, and the owner is able to pay off the loan for less than what he owes.
Are There Tax Consequences for the Seller?
Possibly. There are several factors involved that determine if a short-sale will result in a taxable event for the Seller. The most basic is whether the debt obligation was recourse or non-recourse.
If the loan obligation was recourse debt, a Seller could be held personally liable for its payment. If the loan obligation is non-recourse, the lender can look only to the property for repayment. The best course of action to follow is to seek the advice of an Attorney and/or Certified Public Accountant.
Should a Seller Consult a Realtor?
The Pre-Foreclosure process can be very complex if a Seller is not familiar with all the laws involved. A Realtor is a professional that can help reduce the learning curve, thus translating the time savings into loss mitigation. Remember, once the foreclosure process has started a Seller has approximately 110 days to prevent a Trustee Sale. Is saving a commission worth the risk of not having a Real Estate professional as a guide?
Should a Buyer Consult a Realtor?
If you are a thinking of Buying a short-sale as an owner occupied primary residence it is important to involve someone that understands the Pre-Foreclosure process well enough to navigate through the numerous hurdles short-sales entail. Since the Listing Firm is the one who pays the Buying Firm's commision, it would make the best business sense to have a Real Estate Professional on your side. Click Here to see a list of Short-Sales currently available.
Should an Investor Consult a Realtor?
If you are a seasoned investor and have succesfully negotiated a few deals, you probably are aware of all the California Civil Codes that relate to short-sales and the proper disclosures one needs to present a short-sale Seller.
If you are new to investing, then, you're timing could not be more perfect. The following update from the California Association of Realtors is something you need to be aware of.
According to the California Association of Realtors, The California Supreme Court has denied review of a Court of Appeal decision that the bond requirement under the home equity sales contracts law is unconstitutional and unenforceable. Schweitzer v. Westminster Investments (2007) 157 Cal.App.4th 1195, review denied March 26, 2008. Under Schweitzer, buyers' agents may represent investors without obtaining the surety bond required under the home equity sales contracts law. Buyers and their agents must nevertheless comply with the other requirements of the home equity sales contracts law.
Prior to this court case, a Realtor could not represent a Home Equity Purchaser without a surety bond, which was a violation of California Civil Code 1695.17.
As a result of the Schweitzer case, the courts have determined that the bond requirement is unconstitutionally vaque under the due process clause and may not be enforced.
What does this mean for Investors? For investors who are not experienced in purchasing short-sales, it means an Investor can now use a Realtor to represent them. Click Here to see a list of Short-Sales currently available.
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Short-Sales 
