Archive for November, 2009

What Happens To The Homeowners Finances After A Short Sale?

When you are negotiating a short sale or note purchase through the bank on a defaulted property its easy to overlook the possibility of a mortgage judgment being filed against the homeowner after the sale. It can be common practice for a bank to file a judgment against homeowners fro the remainder of a mortgage after a property has been sold for less than its mortgage.

A typical short sale involves negotiating with the bank to let you buy a property at a lower price than what is left owed on the mortgage to the homeowners. This allows you to pick up a property cheap the bank to unload a mortgage that the homeowners just cant make payments on and the homeowners to get out from under a mortgage thats downing downhill fast.

What Happens after the Short Sale?
Sometimes youll find that the homeowners dont get away from this deal as Scottfree as they were led to believe. The bank may say okay well let you buy this mortgage or this property for say 60000 when the homeowners still owe 100000 but were also going to court later on to get a judgment against the homeowner.

This judgment against the homeowner basically says that the now former homeowner still owes the bank 40000 which was the amount of the writeoff the bank took on the sale of that property to you. That judgment will remain attached to the homeowner for 2 years and can really mess up their ability to get into a new home. It can also attach to another house that the homeowner buys after selling you the property. So the homeowner automatically gets a 40000 debt tacked onto their other mortgage.

The bank can also decide not get a deficiency judgment against the homeowner for the writeoff on that defaulted property. While you are negotiating with the bank for that property you can also negotiate with them to not get that mortgage judgment against the homeowner. When the bank doesnt get a judgment it is required to send out a 1099 form to the homeowner. This 1099 form shows the 40000 writeoff by the bank as income for the homeowner for that year.

What to Do about the 1099 Form?
As you can imagine most homeowners will be terrified by this possibility. Either they get a deficiency judgment against them for the remainder of the mortgage or the IRS views that 40000 writeoff as income. Be sure to tell the homeowner that when they get this 1099 Form they need to see their CPA or someone who is certified to do their taxes.

The CPA will be able to tell them how to work with the IRS so that this 1099 isnt shown as income. The homeowner may qualify for an exclusion from the 1099 for selling their own home if they have lived in that home for the past 2 out of 5 years.

In addition there is a Form 982 that the homeowners may be able to fill out that shows they are insolvent and have no funds from this sale. If they qualify through this form the IRS may not require them to pay taxes on that 40000 writeoff.

Dont blame the banks for this little predicament that can pop up and ruin the homeowners deal. They are required by law to get a judgment against the homeowner or to send out a 1099 form to the homeowner. Just make sure that you lee the homeowner know in advance that if they take the short sale or note purchase deal they will face one of these two possibilities.

About the writer:  Isnt it time you learned how to capitalize on one of the best markets for real estate investing? With the recent flood of foreclosures now is the time to learn to invest correctly in real estate from the hosts of the nations leading show on real estate investing Judson and Lynn Voss. Visit http://www.yourrealestatefortunes.com and learn for free the nohype truth about choosing the right real estate investing strategy to start making you money today.

Real Estate Investment Business Plan – A Detailed Outline For Success

The real estate marketplace can fluctuate dramatically and unpredictably leaving as many stories of failure as there are stories of success. The best way to help stack the odds in your favor is to have a solid real estate investment business plan. A business plan is a detailed outline that includes a clearly stated objective and a how you are going to achieve that objective in this case real estate. It should contain methods of securing financial support either through partners or loans and be able to describe ways of limiting fiscal risks. It should also list certain criteria that will distinguish between investments that are likely to provide a profit and those that are likely to create a loss. Finally it should delineate clear methods of procuring a steady stream of buyers.

The first step to success is to find potential investments. The basic principle to follow is to buy low and sell high. Situations that depress a property’s asking price include foreclosure owner death IRS issues illness divorce relocation and job transfer. In a number of these cases a bank or financial institution assumes ownership over the asset. Hoping to reclaim some of their financial losses they sell off as much of these assets as possible. This typically happens to houses that have come under bank ownership. The asking price for these houses is generally much lower than market value. These types of situations are advantageous to an investor because a lower asking price ensures a higher profit margin. A successful real estate investment business plan should include as many of these beneficial opportunities as possible thus increasing the likelihood of a greater profit margin.

The next principle of any business plan is to secure the funding needed to get started and keep the process going. When dealing with real estate this part is usually straight forward and easy. Ideally the money for the initial investment would come from your own savings or a trusted partner. In this way while you are risking your own money failure would not harm your ability to garner future loans from banks or mortgage lenders.

However not everyone has enough personal capital to begin buying real estate. This is where proven time tested techniques are utilized to secure the funds needed from joint venture partners or private lenders. Both of these groups are mainly interested in two items; One how secure is their money and Two How much will they be paid. As long as it is a truly good deal you should have no problem finding the money. Do not be afraid to share some of your profits to your money partner better to share some than not be able to do the deal and make nothing. The idea is to secure the loan purchase the property sell the property and then pay off the investor. Using this method you can buy real estate without any personal financial commitment.

Finally a real estate investment business plan should include a stable method to facilitate a deal with your exit strategy. This should consist of a manner to procure buyers in the marketplace. There is no shortage of these and it is a way to close the deals that ensures the highest possible profit margin possible. It may be a good idea to hire an advisor at this point if you are not confident with your own experience. In the beginning it is a good idea to reinvest the profit. In this way you can create more opportunities to earn more money thus securing the ultimate goal: financial success.

About the writer:  A variety of Miami Real Estate and Miami Commercial Properties are available at great prices at ConstecRealty.com. Miami Condos and real estate in other Florida areas such as South Beach Aventura and Key Biscayne are also available for the taking.

Name Your Price With Arizona Real Estate!

If you’re looking to buy or sell a home there is plenty that you need to know about Arizona real estate. When it comes to Phoenix AZ real estate you might think that now isn’t the best time to buy or sell but you might be wrong. If you can find an AZ real estate agent that knows the area you can very easily buy the home of your dreams or sell your own home no matter what condition the market is in. The Arizona real estate market might make it a little harder to buy and sell Phoenix AZ real estate but AZ real estate is cheaper than ever so buying is great right now. Arizona real estate isn’t impossible to sell. It might be a little more difficult but as long as you price your home right finding an Arizona real estate buyer shouldn’t take very long at all.

The Arizona real estate market is primed for buyers right now. Whether you’re a first time AZ real estate buyer or if you’re just looking to purchase a different piece of Phoenix AZ real estate you’ve got plenty of options. People are selling Arizona real estate faster than buyers are snatching it up so you can practically name your price. Although the economy is a little slow and you might find it a little more complicated to get a mortgage right now as long as you do you’ll be able to find the Arizona real estate that meets your needs. If buying Arizona real estate is something you’re serious about contact an agent that can help you get the best deal.

Arizona real estate isn’t really a place for sellers right now but it can be. If you take the time to find a licensed AZ real estate agent you’ll be much better able to know how to effectively sell your home and get out of it much quicker than if you sold on your own. This is because Phoenix AZ real estate agents know the Arizona real estate markets and are able to advertise your home better which will elicit quicker sales. If you’re trying to avoid foreclosure by selling your Arizona real estate make sure you let the agent know this and they can help you sell fast.

Whether you’re buying or selling having an AZ real estate agent on your side can be very helpful. It doesn’t matter if you’ve purchased homes before or if Arizona real estate is your first venture into home buying. If you’re selling Arizona real estate agents can help you get your home sold too which will take the stress off of your shoulders. Phoenix AZ real estate is a tricky market to get into at times but if you’re prepared and informed you’ll have a better experience. Arizona real estate agents offer a little bit of something for everyone so you’re sure to find the help that you need. As long as you take the time to research Arizona real estate and know what you’re getting into your real estate endeavors shouldn’t be complicated.

About the writer:nbsp;nbsp;During the late 1980s Mark fell in love with the Philadelphia real estate market. The first condo he bought for himself was in Old City. Working with bank foreclosures on multiunit buildings Mark began to carve his niche as a condominium specialist. Since that time Mark has progressed into helping developers turn apartment buildings into condominium buildings. Having been inside countless condos in the Center City real estate area Mark is intimately familiar with the available properties. Mark prides himself and impresses others of his vast knowledge of what’s trendy and knows which finishes buyers look for when selecting a home…. so much so that he’s been seen on HGTV’s What You Get For The Money CN8′s Money Matters and was the 2005 winner of Philadelphia Magazine’s Kitchen of the Year contest.

A graduate of Bowling Green School of Business in Northwestern Ohio Mark began selling in Philadelphia in 1989 and has been addicted to it ever since. He still resides in Old City and loves the area!

Contact Mark at http://www.centercity.com or markcentercity.com