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Avoiding foreclosure with a short sale

I've been dealing with a seller recently that has been approached by one of these "We Buy Houses" people. The snake oil salesmen are back at it again with these people... Promising them the world!

If you are in a situation that you need to sell your house be very careful and talk to a real estate agent that has dealt with a short sale and the loss mitigation department of the bank.

Here is what they were promised and it was amazing to me. They were promised if they sell their home with a real estate agent that they would have to pay 7-10% and they would lose all that equity in their home, where as if they sold it to them, they wouldn't have to pay a cent.

But, if you read the fine print of their paperwork, it states they negotiate with the bank to buy it from them for 70-75% of what it is worth and then they sell it quickly at 90-95% of the appraised value. This way they guarantee they have a quick sale and a hefty profit for them selves.

Now, it is true the home owner doesn't have to pay a dime to a real estate agent or the bank. But what they don't tell you is that if you had any equity in the home that you would lose that even if it was 10-15%. You pay nothing, but you also get nothing and most of the time they lie to you about what your home is worth. They ask you what you think your home is worth and if the number they have in mind of buying for and that number match, they will try to purchase it.

Now, here is what they never tell you, even in the fine print, and it really can get you into trouble at the end of the year. If your home is worth $250,000 and you owe $230,000 and just to avoid paying a real estate agent you sell it to a person that negotiates with your bank to get the price lowered to say, $200,000, then at the end of the year you get what is called a 1099 from the bank for the difference. So when you go to turn you your taxes, that $30,000 between what is owed and what the person bought it for now becomes income on your taxes. So you are paying for someone to buy your home, just at a later time, and you never get to see that $30,000. (Consult your CPA for more information on foreclosure and the 1099 and how it may affect your tax liability)

For more information on selling your home prior to the bank taking it back, feel free to contact me anytime.

 

Respect Realty LLC (Expect More)

 

At Respect Realty, LLC our agents believe in 100% dedication to client satisfaction.  We specialize in property and land acquisition around the Portland Metro and Vancouver, WA area. We delight in working with first time home buyers and sellers to guide them from start to finish. Our doors are always open and we are always happy to assist you with your real estate questions.

 

Reach out today, we look forward to talking with you!

 

Todd Clark and Seraina Aguayo (Owners of Respect Realty)

Respect Realty LLC (Expect More)

(503)564-3130

info@RespectRealtyNW.com

www.RespectRealtyNW.com

 

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Comment balloon 7 commentsRespect Realty LLC • July 26 2007 12:36PM

Comments

Unfortunately, most people don't read the fine print and believe the guy that is promising to rescue them from their financial woes.  You are so right that the IRS will collect payment for the difference.

Posted by Dotti Driver, GRI, E-Pro Realtor (Sky Realty) about 11 years ago

You can't escape the IRS. 

 

Patricia Aulson/Lic REALTOR/NH/ME/MA

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) about 11 years ago
Dotti and Patricia you are both correct you can't escape the IRS and most people don't read the fine print. It is such a shame, that they usually don't find out until almost 7-10 months later when they do their taxes.
Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) about 11 years ago
I agree, they believe these companies are their white and shining armor and forget what we are trying the explain to them how it works. The IRS always will collect, and its sad when they get that 1099, they are in a state of shock.
Posted by Jeannette Neerpat, e-Pro Coral Springs/Parkland Real Estate (CondoDomain.com) about 11 years ago

Jeannette,

Lucky for me I usually talk to these people prior to them signing anything with these other companies and I show them the fine print. They quickly realize that the buyers math does not work out!

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) about 11 years ago

It is always a bad situation when people are taken advantage of.

Posted by John Popp about 11 years ago

John it is even worse when it always seems to be do to job loss, medical bill or death in the family. I feel like these people couldn't make it as an ambulance chaser, so they found themselves a new job.

 

Posted by Respect Realty LLC, Brokers - Oregon / SW Washington Real Estate (Respect Realty LLC) about 11 years ago

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