There is good news and bad news on the horizon if you want to sell your Maple Grove, MN home as a short sale. If you owe more on your mortgage than the house is currently worth and need or want to sell, a short sale is quite possibly your best option. It’s important to state up front that you should always talk to an attorney who specializes in real estate issues and preferably short sales/loan modifications before making a decision or signing any kind of agreement.
But back to the good and bad news – you probably already feel like you’re under a cloud of bad news. You need to sell your house, and you’re not going to make any money on it. The good news is that laws have recently been enacted that protect you from penalties you would have previously incurred with a short sale. This article gives a good example:
The homeowner purchased his or her home for $400,000 and secured a loan for $325,000. But now the home is only worth $285,000. Solution: either get the bank to allow you to sell the home for $285,000 and forgive the $40,000 (and wait out the rest of the housing downturn in a rented home) or negotiate with the bank to reduce your loan amount to $285,000 (and, again, forgive the $40,000).
Previous to the new laws, a person in this kind of situation would or at least could have been held responsible for some of the $40,000 that the bank “forgave”. As well, the $40,000 would have been considered “income” by the U.S. government and would have been taxed accordingly.
Thankfully, this is no longer the case. For now. The good news is that banks are now required to relinquish the homeowner’s debt liability (assuming they sign a short sale agreement) for the remaining amount. And that amount will not be taxed as income. Until January 01, 2013. So while it’s good news for anyone considering a short sale in Maple Grove, it also means that time is of the essence. Short sales can take up to six months to be completed, so if you’re interested in not paying taxes on the remaining amount, you would be well served by getting the process started soon.
Doug and Sean give other great tips regarding short sales in this video.
A short sale may be the best option for selling your Maple Grove, MN house. We have experience and knowledge about the short sale process and, along with a good attorney, can help you navigate this unfamiliar territory. Taking the necessary steps to start the process soon may very well save you a lot of money in the long run!