Blogging Broker

Beware the eager broker or real estate salesperson who wants to list your home for a SHORT SALE.
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Defaults are rising and there is a lot of buzz in the Real Estate industry about Short Sales. Everybody and his brother is spamming me with seminars to educate me on “how to do them”.

Short Sales are NOT for everyone. I will be happy to assist you with a short sale on your property but please read this:
A client called me the other day asking if I could do a Short Sale on an investment/rental property he has and after hearing the details this was my conclusion:

• His property would probably sell for 100k less than what he owes : around $320k
• The $100k forgiveness of debt would be taxed as income
• Additionally he would have to pay the FRPTA of 3.3% to the state

All I could see was one huge tax liability. Depending on his tax bracket, based upon the above he could be liable for approx $40,000.00 in taxes on a Short Sale (quick mental guestimate). So I told him to consult with his accountant regarding the tax ramifications and if he said to do it call me back. In his situation his best option may be to just let the lender foreclose. However, with a foreclosure the possibility of a deficiency judgment may exist.

You really need to look closely at all the options and the consequences. Always consult with a tax adviser or CPA prior to doing a Short Sale. Call me and I will be happy to discuss the alternatives.
© Randy “Lazarus” McAtee
Owner/Broker Lazarus Realty
559-301-1647
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