If you Worked with Short Sales...You Need to Know...

By
Real Estate Agent with EXP Realty 414-525-0563 57026-90 Broker

    If you worked with short sales you know that you helped people through one of the most difficult times in their lives...and we applaud your efforts. Your education in this area did not go unrewarded. Whether Sellers told you or not...it gave them a hand up and a way to get a fresh start. The debt, the phone calls from lenders, the barely even imagining one day at a time were erased.  We have stayed in touch with many of the hundreds of our short sale Sellers who became our buyers and are living the American Dream of home ownership once again.

    One of the things short sale Sellers are told...and we put in writing at the very busy time of the sale...the Lender reserves the right to issue a 1099 form to the Seller for the amount of the debt forgiven. There is no way to know IF the lender will or will not issue it...and now we also know that the "when" it is issued may also come at a later date. We recently got a call from a former Short Sale Seller who told us about her letter from the IRS indicating she owed taxes.

   All the emotions we had experienced so often from short sale sellers spilled out again over the phone call...the anger, the hurt,..the why me...If I had not...I should have...I could have..if I had not married him...a familiar echo from years ago.

    It is soooo important to know what you DON'T know and to know that just as with many other things in life...each situation is different.  I told her we would do some research and get back to her.  Research we did...with lawyers an accountants. Some who would confess that they didn't know...some who passed along other resources...and some who gave different answers than others.  Our goal was not to give her an answer...but to share resources she would need to resolve her issue.

     We have those resources now for varying situations and as ever mindful professionals who have done short sales in markets across the country,...know the contact information for tax lawyers, for legal aid that may be at free or reduced charge and real estate attorneys...be a good scout...be prepared...show your past clients what full service is...and provide it.

   This has been a professional service message brought to you by Sally K. & David L. Hanson, Broker Associates with EXP Realty, LLC honored to be of service for all things real estate..right side up OR upside down in southeastern Wisconsin.

      

Posted by

Sally K. & David L. Hanson, ABR, CDPE, CSS, e-Pro,ILHM, REDS


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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Roy Kelley 11/07/2019 01:00 AM
Topic:
Real Estate Best Practices
Tags:
wesellupsidedownhomescom
short sales and taxes
short sales and the irs

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Rainmaker
3,301,866
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

We went to classes in 3 states George Souto and each transaction is different...it does take I think...more than a Village to do them thoroughly and correctly,

Oct 30, 2019 07:24 AM #2
Rainmaker
3,226,513
Lawrence "Larry" & Sheila Agranoff. Cell: 631-805-4400
The Top Team @ Charles Rutenberg Realty 255 Executive Dr, Plainview NY 11803 - Plainview, NY
Long Island Home and Condo Specialists

Sally and David Hanson are the King and Queen of short sales in their Wisconsin neighborhoods. The best advice...is to call them!

Oct 30, 2019 08:37 AM #3
Rainmaker
1,856,761
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

I've worked with lots of short sales and I still don't know what I don't know.

For sure...

Oct 30, 2019 08:50 AM #4
Rainmaker
1,367,905
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Sally,
This is a great heads up for anyone who has been involved in a short sale. Not everyone is aware that forgiven debt is taxable. 

Oct 30, 2019 08:53 AM #5
Rainmaker
2,645,826
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I am lucky that I didn't have to deal with many short sales, they were not fun at all.

Oct 30, 2019 09:51 AM #6
Rainmaker
1,992,255
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good afternoon Sally K. & David L. Hanson - there is nothing less welcome than a letter from the IRS.  I does sound like there is no consistency in IRS proceedures, however, which is problematic.

Oct 30, 2019 11:01 AM #7
Ambassador
3,962,500
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Sally and David- love your post. One...keep up with your past clients!!! Two- know where to get the people who have the answers and give their number to your clients.  Full service is right. 

Oct 30, 2019 06:33 PM #8
Rainmaker
2,995,032
James Dray
Fathom Realty - Bentonville, AR
Exceptional Agents, Outstanding Results

Morning Sally.

I've only did one short sale, don't know that I would tackle another one.  

Oct 31, 2019 02:39 AM #9
Ambassador
3,962,500
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

                                 

                                    Thank you, Sally and David. 

Nov 02, 2019 06:37 PM #10
Rainmaker
748,791
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

Indeed! Did SO MANY back when, fortunately everything's been an equity sale for many moons. Still, I do see them listed on occasion. And yep! The dreaded 1099 is a distinct possibility, especially for those who sold 'second/vacation property' . . .

Nov 03, 2019 05:49 AM #11
Rainmaker
3,692,355
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Sally. I was never involved in a short sale that closed and I never listed one. You must know to to do it and I didn't.

Nov 03, 2019 05:51 AM #12
Rainmaker
456,902
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Love your posts. The belated 1099 is always a shocker. I will work with shorts sales depending on the lender! There are some lenders out there that make it just too much trouble

Nov 03, 2019 01:16 PM #13
Rainmaker
1,271,461
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Sally,

A short sale is one of the most traumatic types of sales for sellers to deal with.

Nov 03, 2019 01:19 PM #14
Rainmaker
5,502,648
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much for sharing your experience and your advice.

Nov 04, 2019 12:12 PM #15
Rainmaker
526,367
Wendy Rulnick
Rulnick Realty, Inc. - Destin, FL
"It's Wendy... It's Sold!"

Sally, That is a good reminder to let short sale sellers know that there may be tax consequences and they should consult with their accountant to find out for sure, and if the taxes can be mitigated.

Nov 04, 2019 12:16 PM #16
Rainmaker
3,301,866
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Yes Wendy Rulnick ...years after closing while they were told and given information in writing they thought "over was over"....Not yet,

Nov 04, 2019 12:20 PM #17
Rainmaker
541,071
Karen Rice
Davis R. Chant, REALTORS - Hawley, PA
Northeast PA & Lake Wallenpaupack Home Sales

I'm sure this has not occurred to many... rude awakening!

Nov 07, 2019 01:18 AM #18
Rainmaker
3,050,482
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

Not sure how I missed this, but just saw it in Roy's re blog. The timing is great as I just had the worst short sale in 10 years. It follows the best short sale ever that took 27 days form start to close. People forget short sales involve feelings and i love how you touch on that Sally K. & David L. Hanson 

Nov 07, 2019 05:26 AM #19
Rainmaker
562,667
Maria Gilda Racelis
Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington - Manchester, CT
Home Ownership is w/in Reach. We Make it Happen!

Good Morning Sally,

I only did 2 short sales since I started in the business and I have one that I am currently working on. Lucky for my 2 sellers, their debts were forgiven.

Hopefully, it will be the same fate with my current seller. I never give advice on legal and tax ramifications but I directed them to the professionals in this field. 

Great blog.

M

Dec 02, 2019 02:58 AM #20
Rainmaker
2,127,572
Sharon Tara
Sharon Tara Transformations - Portsmouth, NH
New Hampshire Home Stager

You certainly are experienced in this very confusing part of real estate. Your clients are very lucky to have you on their side.

Dec 05, 2019 06:09 AM #21
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Rainmaker
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Sally K. & David L. Hanson

WI Realtors - Luxury - Divorce
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