Tuesday, November 13, 2012

The Mortgage Forgiveness Debt Relief Act Set to Expire on December 31, 2012

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As we are on the cusp of a changing market, many homeowners continue to struggle with underwater mortgages as a result of the housing market crash back in 2007. In fact, the impact was so great that the government instituted a program called the 
Mortgage Forgiveness Debt Relief Act in 2009 to help offset some of the hardships faced by millions of Americans. Today, that program is set to expire just two short months from now. That’s why it is critical to list your home and successfully short sale it prior to the Act’s deadline so you can save from being taxed on the forgiven or discharged debt.

If you are considering a short sale – it is important to keep this in mind. A short sale entails the bank receiving less money for the property than what is owed on it due to property devaluation and the discharged (or forgiven) debt is considered “income” by the IRS. With the Mortgage Forgiveness Debt Relief Act, homeowners are able to write off this discharged debt and avoid paying taxes altogether on this amount. In some cases, this can amount to a very significant number, forcing the homeowner into an even deeper situation of hardship.

It is important to keep in mind that the tax relief only applies to your primary residence and as long as the short sale is completed prior to the Act’s expiration date, you will not receive a 1099 from the government, nor you will not be required to pay taxes on the amount of forgiven debt.

Since this act is set to expire on December 31st unless the government extends this yet again, you only have two months within which you need to list the home, find a buyer, receive an offer, have the bank accept the offer and make it to the closing table – all before December 31, 2012. The National Association of Realtors is working hard to extend the deadline for the Act but until there is some concrete action, the December 31st date stands.

That means you need to start the process now.

For more information about the Mortgage Forgiveness Debt Relief Act, to learn more about short sales or anything else real estate related, I invite you to contact us today! We look forward to helping.

Thursday, November 1, 2012

The First Buyer To Make an Offer Is Usually the Most Interested Buyer

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We’ve seen it time and again. A seller eagerly lists their home, finds a buyer with a serious offer but chooses to wait things out and see if other (better) offers come along. While it can happen and it does sometimes, the problem is that there is a process usually followed by buyers and along with it a pipeline. Here is a look at how they lead up to making an offer and how by the time the first buyer seriously considers your home they are likely the most viable one.

Buyers Are More Educated

With the advent of technology, the entire real estate industry has changed. Gone are the days when buyers would rely solely on their agent to find a home to suit their needs. Today, the Internet has taken over. In fact, studies show that over 90% of buyers spend weeks online searching for their perfect home before even talking to an agent.

So by the time a buyer is at your doorstep with an offer, there is a good chance they have thoroughly researched every aspect of the local market. They are fully aware of your competition, have weighed all pros and cons of your home and are seriously interested in your property. After countless open houses and obtaining plenty of education about the real estate market in their area, they know when they see a property that suits their needs. In many cases they are waiting for the perfect one to become available so the minute it does, they make an offer.

By the Time They Make an Offer, They Are Well Into the Process

Where sellers go wrong is to want to wait for more offers. In the process, those very serious buyers that have already made their interest in your home known will likely find another home to suit their needs. Buyers today are savvier than ever before – and with that education that they so readily find and absorb from various sources (the Internet, other publications, their peers, professionals) they have an acute knowledge of the market.

In the process of selling your home, it is critical to keep all factors in mind. Factors such as the condition of the market, your agent’s recommendations, current inventory levels, the number of days most properties remain on the market before being sold and of course prices. Putting all of that into play will change how you handle that first buyer but remember – the first buyer will almost always be your best buyer.
For a consultation that is customized to your needs, contact us today. We look forward to serving you!