pre-forclosure options - selling your home

After reviewing all your options you may determine there is no reason for you to "save" your home.

There are a host of legal issues to consider such as whether there may have been predatory lending. Once you run through the legal checklist some of the options you may consider will be

1. deed in lieu of foreclosure or jingle mail
2. selling to an investor
3. If you have time, you can sell to the public by yourself or with a Realtor
4. If you are upside down (you will net less than you owe)you may negotiate a short sale with the lender. Most short sale advisers incorrectly indicate that you must have a buyer before you begin a short sale negotiation. (This may be because the adviser is actually trying to buy your home via a short sale.)
5. You can allow the foreclosure to happen (although this usually not the best option.)

Some of the Risks:
1. Deficiency judgment (if not part of the negotiation process.)
2. Tax bill from the IRS for debt relief (may put you in a higher tax bracket.
3. Scams
4. Credit

Avoid foreclosure's black eye by going with a 'short sale'

here the article makes a distinction between a short sale and an upside down sale. This seems to expand on the concept of what upside down is technically, but it does agree with the lose definition I recently gave.

Of course the definitions do not really matter to the homeowner.

The important questions are - do they have to come up with cash to close, do they have to worry about being sued by the bank for a deficiency or do they have to worry about a higher tax bill from the IRS.


PoughkeepsieJournal.com - Avoid foreclosure's black eye by going with a 'short sale'

Real Estate Short Sales - How to Handle Real Estate Short Sales

Real Estate Short Sales - How to Handle Real Estate Short Sales

Nice summary on about.com of what it may take to get a short sale done by a Realtor.
More information about setting up a short sales.

The Lawyer and Realtor in me would like to complement the Realtor, Ms. Weintraub, for stating the following:

I suggest that all borrowers

• Obtain legal advice from a competent real estate lawyer
  
• Call an accountant to discuss tax ramifications

Ms. Weintraub goes on to state:

As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Be aware the I.R.S. will consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

--
There are a few major problems for non lawyer short sale "advisors".
In my opinion they can not legally aggregate any of the financial information, nor may they advise the homeseller as to whether they should turn over the financial information.

One of the most important pieces of the short sale puzzle is the weighing of the risk vs. reward.

On one side of the equation a homeseller has the risk of a de
Any communications made by a Realtor will not be privileged.


They are However, not everyone should follow Ms. Weintraub's advice. While this is the usual path followed by short sale "advisors" Absent other circumstance I find it to border on practicing law without a license and just plain negligent.

In my view the homeowner must be advised of what might happen if the bank does not agree to a short sale. By handing over to the bank information about the amount and location of assets you just compromised one the most important leverage points a homeowner has against a collector of a deficiency judgment.

You just made the banks job much easier. I am not advocating that you never turn over this information -- I am advocating that a homeowner be appraised of the legal situation before doing so. This information turnover must be part of a very controlled quid pro quo and if it is turned over there should be limits on how it may be used.

Any Realtor and the Realtors Broker not bringing a lawyer into this stage of the negotiation is a very pretty target for a law suit from a disgruntled former homeowner.


I suspect there are going to many Brokers getting sued when the former owners of homes get tax bills from the IRS for loan forgiveness.

California and Florida Realtors need to partner with Lawyer on short sales or foreclosure work . Our law firm has an office in San Diego and the Sarasota or Bradenton area of florida.