Timing a Short Sale - Anna McClusky

Anna McClusky-Short sales have definetely dropped in numbers, and the housing market is happy for it! They arent gone howerver, and I have a few short sales right now that have been waiting on pins and needles hoping the Fed gives them one last year to defer any tax burdens on short selling their homes. As usual, the Fed waited until the last second to announce that they will be continuing the tax credit. But finally! One more year!

That being said, I think it wise to expect, this is the last year they will continue to honor that.

What does the credit mean to you, if you are in home loan distress?
Basically, if you sell you home for less than its value you are taxed on the remaining amount as if it were capital gains. Could mean a large tax bill at the end of an already stressful situation. For the time being, the government has agreed to not tax you on the difference...

I've been worried I might need to sell, and my home doesn't have enough value, what should I do? What will happen to my credit? 
Here's the thing, I don't have a 100% answer in what will happen to your credit.  However, recently lenders began now loaning, within 2-3 years of a short sale, to many of my clients.  Should you default the entire amount, as apposed to the short amount of your loan, it could have a much bigger affect on your credit. Additionally, what else are you letting go in order to pay that loan? Multiple lines of credit?

I will not for a second, try to imply I am in any way a credit consultant, I am not. I am a real esate expert who has successfully short sold homes, and I am grateful to see past clients able to buy again.

Bottom Line: Your credit is your decision and there is not garauntees. In order to short sell your home you will be required to default at least one payment to your lender. Work through a modification, if you can, first. In fact many banks are making you attempt a modification at the front end of a short sale delaying the approval process even longer. You may consider getting that out of your way.

If you should choose to sell, don't qualify for a modification, or need to just move on, I recommend acting soon. Banks do NOT act quickly these things can take 3-4 months. Rememember your goal if you choose is to complete the entire sale before the end of the year, because as the market returns I suspect this will be THE LAST YEAR for the tax credit to go through.

Thankfully, we have a plan, we have the RIGHT people and the experience at no cost to you.