Recognizing The Hidden Aspects Of The Short Sale

When a homeowner finds himself unable to meet the agreed upon mortgage payments for their home it can be very distressing. The risk to their credit rating and the possibility of foreclosure can be more than a conscientious homeowner is able to deal with. This is why many have begun to look carefully at the short sale option as a means to get out from under the burden that the mortgage may impose.

While a homeowner may be faced with the loss of his home there are many benefits of seriously considering a short sale; the most obvious would be a release from the mortgage payment obligations as well as relief from the expense of maintaining the home. Another advantage of a short sale is that often the mortgage holder is willing to waive the deficiency owed on the mortgage relieving you of the burden of satisfying the debt after the deal is closed.

Still, with all of the possibilities that can be gained from a short sale a homeowner would do well to weigh all of the factors involved before embarking on such a course. While in many cases such a transaction can prove favorable for both homeowner and the lending institution there are other reasons why one might be wary of taking this step.

The Short Sale and Your Credit

For the most part, may are under the impression that a short sale can have a lesser impact on your credit score than a foreclosure however this is not always the case. According to some real estate experts the impact may in fact be about the same. This will depend on how the lending institution chooses to report the transaction. For example, a financial company may choose not to report the short sale itself but will continue to report your default payments as delinquent on your report. You will have to wait the required amount of time for that to be removed from your credit report.

There are however, other ways that this type of transaction could actually improve your credit situation. If you already have a pretty high credit score the reporting of a short sale could result in only minor damage to your credit history than those who may have a history of poor credit. While those that have a good report may still face the negative impact of a short sale the odds are that they will be able to recover from that hit in far less time.

Considering the fact that it will take just about the same period of time after a short sale as a foreclosure – seven years – for a person to restore their credit it is important for you to discuss with your lending institution how they plan to report the sale to the credit bureau.

The Short Sale and Your Taxes

Another factor that must be considered before executing a short sale is the tax liability that you may incur. In many cases, the remaining balance of debt is often forgiven by the lender, which on the surface may seem like a blessing in disguise. However, it is important to understand that the lender will be required to report the cancelled debt to the IRS, which could quite likely make you liable for taxes on that money. It will be considered as gains on your part so while you may be relieved of the burden of making those regular monthly payments you could be facing a huge tax bill at the end of the year.

According to the IRS, the reason behind this is that the forgiven debt is considered a “gift.” As a result it was considered “income” and therefore subject to being taxed.

However, there are some situations where this rule does not apply. Generally, exceptions can be applied to short sales on homes that are considered your primary place of residence (the place where you live). This type of exception falls under the Mortgage Forgiveness Debt Relief Act.

There are Always Exceptions

This is not to say that having a short sale is not worth it. Every case is unique and carries its own level of risks and rewards. There are other ways where a homeowner may be able to avoid the income tax hit when they’re doing a short sale. If you’re seriously considering doing a short sale to help you get out of your financial burden it would be well worth your while to speak to a number of different professionals to find out just how the decision could impact you and your financial future.

Who to Talk to

In most cases short sales are often handled by real estate experts but you should not limit your inquiry to these individuals. You will also want to discuss your decision with your lending institution, an attorney, and a tax expert that has a history of dealing with short sales. The reason for this is obvious.

The realtor will often tell you that short sales will protect your credit but this statement does not usually reflect the whole truth. While this may be true in some cases it does not apply in every situation. Realtors also cannot give you legal advice on different aspects of selling your property. Always remember that agents are first and foremost concerned about making commissions, which they can only make if there is a sale.

While a homeowner may be seriously concerned about avoiding a foreclosure and at the same time getting out from under the heavy mortgage they are facing, a short sale can sound very promising. In many cases a short sale can be the ideal solution for homeowners in such a situation but it may not be the only answer. It is strongly recommended that before you take the step to do a short sale that you weigh all of your possible options and get expert advice from a number of different professional perspectives so that you not only can get relief from the financial stress you’re under but that relief lasts to support you well into your future.

How Technology Has Brought In A New Age Of Real Estate Investing

Whether you’re buying a piece of property or you’re selling you’re probably thinking about the recent struggles that the real estate industry has faced in the last few years. With a bout of foreclosures, an ongoing recession, and a sudden downturn it is easy to understand why many may be facing their decisions with more than a little trepidation.

Still, there has been real evidence that the real estate market can and has proven to be profitable for both buyer and seller in many ways. One of the reasons for this is the new way to find, select, and purchase property. With the many different technological advancements now available, investing in real estate can be very rewarding.

Using Mobile Devices

Today, rather than looking at newspaper ads and real estate books people are now turning to their mobile devices to get needed information. People are using smartphones, tablets, and other portable devices to collect data needed in real time. Those who are buying properties can quickly gain access to homes for sale as soon as they hit the market and those selling properties can quickly collaborate and negotiate deals quickly and easily.

With apps readily available, contracts, bids, and other important documents can be transferred from person to person instantly allowing for deals to be made with increased efficiency. And now with the ability for E-signatures to be applied to any document deals can be made and sealed without having to deal with the logistics that were most common in the past.

Easier Search

In the past, searching for the right property was often the biggest challenge for home buyers. Searching the web and sifting the many real estate listings could be a time consuming venture. However, with the new technology available a potential home buyer can sift through the thousands of listings and narrow down the list based on their own specific parameters, speeding up the search for new homes exponentially.

Making your property search mobile has made finding the right location to invest in much more efficient than ever before. Rather than having to sift through tons of information and waiting for documentation to be delivered, reviewed, signed, and resent, decisions can be made at a moments notice. The information you receive from these mobile devices can be filtered based on a number of parameters that you the investor suggest; it could be your geographic location, price range, or even the individual qualifications of an expected agent.

In addition to all of this the information you glean can be delivered and communicated within seconds making it possible to find that right real estate investment property in record time.

The Virtual Tour

One new feature that technology has done for those who are looking to buy real estate is to provide the virtual tour. This feature is a means for a potential buyer to view a piece of property without having to be on site until they are ready to seriously consider its potential. It also helps agents and realtors to show a particular property to more potential buyers without expending the added effort to navigate the different logistics to get all parties together at any given time.


The fact of the matter is that most people already have access to this new technology. The challenge that they now face is learning how to take these advantages and use them to the best of their ability. With the ability to finalize transactions without a face-to-face interaction more deals can be completed much more efficiently.

The world of real estate has changed drastically over the years. The times of pouring through newspaper advertisements and searching the real estate listings to find the right property are gradually fading into the past. With modern technology at your fingertips finding the right piece of property to invest in is easier than ever. You will be able to save not only time and energy but by extension save money too in your quest to find the perfect home investment.

Today’s real estate industry has changed drastically over the years; with the nation recovering from the real estate crisis of the past consumers are now becoming much more wary of their investment decisions. They want to find, negotiate, and seal the deal with fewer hassles and pay less commissions at the same time. This means that a realtor will have to deliver on their promises much more thoroughly than ever before and with far less time to do it in. This could be next to impossible if it weren’t for the advancements of modern technology over the years to make the job that much easier.