Short Sales for Foreign Owners. Do they make sense?

Thanks so much for the blog, interesting to think about, especially in FL...not alot here! Have a great weekend!

Bryant- We have done a few short sales for foreign nationals with no problems.

On another note- about whether a short sale is better than foreclosure- I think that most of the time it is but also that in many instances a bankruptcy is the best answer for many people. We can close short sales while they are in bankruptcy with the permission from the trustee. We have closed several of those also. Katerina

Geesh Hun...

Need I say more? :)

TLW...ROAR!

If he's planning on using his credit in the United States anytime in the next 7 years or if he has reachable assets, it might be better to try and negotiate a short sale.  If not, why should he care about doing a short sale?

Bryant.

"Short Sales for Foreign Owners. Do they make sense?" 

On the face of it your question is superfluous! Banks accept Short Sales because they are good for the bank, not the debtor, witch makes "for Foreign Owners" irrelevant unless the bank is foreign owned.

The collectible of foreign owners may enter the equations, but is the proposed short sale good for the lender?

On the other hand, FIRPTA is a huge question! Unless what you meant was"non-resident alien"we're not talking about a primary residence so there would be tax on forgiven debt, how do you with hold tax from nothing? And, who's libel for not with holding the non-existing?

This is not the time to call your pernial first quarter tax specialist!

Great though provoker! To bad about the title. :>)

Bill

Bryant - Just thinking it through- it must cost a creditor a lot more to pursue someone out of the country for collections. Would they even bother?  Then again, there must be firms that specialize in this, too.  I'd like to know more.

Hi Bryant..Maybe find out his motivation first, no need to sell if he is not in arrears, the market will come back. When I first started back in the Cave man days..people bought homes knowing they would own them in 25 years...no thought of what it was worth year by year.

Cheers, Let us know what happens :O))

Bryant,

A really thought provoking question!!  However after reading (skimming) Richard Zaretsky's blog about short sales and FIRPTA, I don't know if I would jump into a sale where the IRS does not have guidelines in place to regulate the sale.  Very dangerous territory for my taste, and what would the commission be on a 80 to 90 thousand dollar sale.  Is the not knowing really worth it.  In our area there is just too much business to go after, without this type of baggage.

As for your question to the foreign national I believe that a deed-in-lieu would be the best way to go (just my opinion).

Again,

Great Question!!

Hi Bryant... Let's cut to the "real" question here for an agent who might handle this short sale... How much do long distance phone calls to China cost per minute?  Do they make calling cards for those calls?  Seriously though, we have worked with clients who were non-US citizens residing in Mexico and had no difficulty (except for the phone calls) in getting the short sale done.

I got a bizarre "Chinese lead" last week. To be honest, I was very suspicious of it, so I didn't respond. I read it over and over again, trying to make sure it was not legit. I was never positive, but I decided to err on the side of safety =/

Probably a short sale will make sense, kind of depends on his tangible assets.  There's a number of other possible options for foreign nationals.  All require the use of an attorney.

Had a foreign short sale with BoA .  .did not go anywhere. My client was deported to Mexico and it became a nightmare. . at the end.

I simply stop calling them, moved on and waited for the foreclosure ax

Bank of America lost big time because I had a ready buyer. . meanwhile the house depreciated over 50% 

My client was simply tired of going to the embassy to notarize papers for us ( 3 Times) 

BB: I would refer this client to a CPA who understands the ramifications of canceled debt and not make any statement about which way to go. For one thing, there is not enough information to make a judgment call and for another, it's not my place to make it. I'm not licensed to dispense tax advice.

I moved to England in 1996, after having bought and sold real estate and building up a stellar credit history. It was useless in England. I had to start all over. Opening a bank account and getting a phone line was a nightmare, and it was 6 months before the bank trusted me with a checkbook so I could easily access my own money. When I moved back to the US, all the credit I had built up in England, again buying and selling real estate and opening department store cards and utility accounts, was worthless. And being off the radar for so long in the US didn't help.

Therefore, I doubt if a short sale or foreclosure would make a whole lot of difference to your customer as far as his credit.

Cheers,

Robin

Bryant - what wuld be  the benefit for the Seller to do short sale? He is not going to get a penny (this is a short sale), so the reasons to do it could be saving the credit, avoiding potential judgement, etc, but the guy can't care less about credit... Why bother?

I also do not think FIRPTA could be an issue even if he decided to do the short sale. Unlike "regular" tax, FIRPTA requires the Title Companies to take the money, so if the guy would be short selling, it will be done by the closing attorney, and the bank would most probably  have to pay it as what can you get from the Seller anyway?

There are several exceptions to the withholding requirement (but not to the notification requirement), one of them states

"when the amount the transferor realizes on the transfer of a U.S. real property interest is zero". 

In a short sale where the seller/transferor receives "zero", this then should apply.