Buying or Selling a Home/is short sale the answer

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Expert: John Hendricks - 6/13/2008


Question
i bought a house 2 yrs ago in sacramento area for 395,000 now valued around 250,000. due to financial hardship i ask my secondary lender to modify my loan so i can afford my monthly mortgage (Presently 2,300 interest only 5/1 arm) since the interest rates was lowered several times already. I was told by the lender they can not modify the loan and told me to write a letter of hardship and put the house in market for a short sale. i have not yet put the house in the market. A canadian friend of a friend is offering to buy the house in cash for 200,000. Is the short sale the right way for me? how should i go about this short sale? are there restrictions or additional requirement for canadian buyers in california. thanks.

Answer
Dear Rosivena;

Thank you for your question. I am sorry to hear that you are part of this short sale scenario that is taking place in the Sacramento area. First, I don't believe that selling to a Canadian would be an issue, although the investors may have concerns unless it would be a cash transaction.

Short sales are definitely a way of working your way out of a bad situation. You would want to make sure prior to entering a contract with the buyer, what your overall liability would be with the current mortgage investors if they agreed to the short sale. In some cases, I have heard that there may be some recourse in collecting the difference you owe and the short sale price, plus additional costs the investors incurred i.e. attorney fees, penalties, etc by the investors. The IRS does not look kindly on this short sale either. I have read that the IRS considers the shortage you agree to as profit and you may be taxed accordingly on the considered gain.

Before entering any contract to for a short sale, I would contact your accountant/CPA and the investors holding your notes to get thorough written explanations of what you would be confronted with if you entered a short sale agreement. Second, I would contact a good Realtor in your area to get the market value and evaluation of your home. Hopefully the Realtor will provide you with some additional advise on what steps you need to take to protect yourself from unforeseen liabilities that you may not be aware at the moment by participating in a short sale.  

I want to make clear that I do not know your entire situation; therefore I would highly recommend that you confirm what I have discussed in this note with the professionals who specialize in this type of situation. If you would like a Realtor contact in Sacramento, please do not hesitate to e-mail me your contact information. I know a number of great Realtors in Sacramento and the surrounding areas who would be happy to help you. There is no cost to you for me providing you the information if you choose to use it. Good luck and I hope to from you soon.

Warmest Regards;
John Hendricks
415-259-4518
JohnHendricks@Marin1.com

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John Hendricks

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As a California Realtor for 23 years practicing in Marin and Sonoma Counties, it is now time to provide counsel through AllExperts.com to those who need advise in real estate. My knowledge and experience includes a wide range of resale residential real estate purchases, new home sales, income related investment properties involved in 1031 exchanges, and land. Let me help you in any of these areas...

Experience

John Hendricks has established himself as one of Marin & Sonoma Counties premier Realtors. A native Californian, John is a well-known and respected Realtor in both Marin & Sonoma Counties who has resided in the Northbay since 1976. John began his real estate career in 1986, and since then has distinguished himself as one or Northern California's top producing Realtors. Before joining Frank Howard Allen Realtors, John was an associate of the Prudential California Realty from 1990-1992 where his outstanding sales achievements earned him one of the company's highest honors, the prestigious "President's Circle Membership", presented to the top 2% of associates for sales and earning excellence. Since his association with the highly regarded Frank Howard Allen Realtors in 1992, John has once again established himself as one of his company's Top 10 Producing Realtors in Marin & Sonoma Counties for the years 1993 through 2007 and now in 2008. Five continuous years of outstanding performance has now allowed John to join 15 other Realtors in the prestigious "Lifetime Hall of Fame" for Frank Howard Allen Realtors. John established a group of professional individuals who specialize in a variety of areas in real estate called, 'Lundmark-Hendricks Fine Homes' This group of professionals are dedicated to the success of representing clients with the greatest amount of care and service when either buying or selling real estate.

Organizations
California Association of Realtors National Association of Realtors

Education/Credentials
Upon Request...

Awards and Honors
Frank Howard Allen Realtors "Hall of Fame Member" Chairman's Circle for 10 consecutive years

Past/Present Clients
Joe Louis & Sharon Sigurdson We want to thank you again for your excellent representation of interests during the recent purchase of our home in Petaluma as well as the sell of our home in Mill Valley. We had the unusual pleasure of working with you during the last year both as sellers and buyers. We felt that our interests were always paramount and that we received a very fair price for the sale of the Mill Valley house as well as our purchase of our new home. This speaks particularly well of you, because of the recent unstable and chaotic real estate market. Will Finke "Quite frankly, we came out of a very difficult situation, which time does not allow elaborating on. This was one of the greatest experiences of our lives as clients. John Hendricks is one of the top businessmen I have ever met." Bruce & Nancy Rosentreter "I chose John Hendricks to sell my house. I picked him because I thought he was professional, aggressive, and that he could get top dollar for my house. He fulfilled my expectations completely." Joy Schuelke "Since we were trying to sell a high end home in a very tough market, and in the middle of a very rainy winter, the prospects seemed quite bleak. I was convinced at the time, and am even more so now, that without John's tenure, patience, and tenacity, we would have not been able to move the property." Lynn McCarthy "I cannot stress strongly enough how impressed I was with the service provided to me by John and his group. Throughout the entire transaction, John was always available, always forthcoming with excellent advice based on his years of experience, and always willing to put in the extra effort to make this a positive experience for me. I feel lucky to have had the experience of working with him." Lea Lieurance-Turk "Thank you John for your outstanding real estate services for the past 5 years I have known you. You have made my dreams come true as far as selling and buying property."
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