Critical Short Sale Timing
in Nevada Real Estate
The world of Northern Nevada Short Sales has gone from non-existent to common place in a few short years changing the Nevada real estate and banking industries along the way. There has been legislation mandating timely performance and tax breaks for some individuals, but it is still not a venture for the faint of heart. It is important, however, to make a decision soon if you are thinking of selling via a Short Sale.
Have you been applying, re-applying and re-re-applying for a loan modification? Are you sure of what you will really get from a loan modification agreement? The rumors of principal reductions from banks have been swirling for some time now, but we have not seen the systems implemented yet. They may be coming, but can you risk waiting? In most cases the loan mods being offered aren't giving the borrowers much more than an extension of their misery with minor relief. If you hold on past the first of the year and the current tax break for primary residence short sales expires you could find yourself very sorry that you didn't take action now.
Here is your dilemma. If the current tax break for the debt relief realized by an owner occupied primary residence is not extended, and you sell short with a closing past the end of the year, you will have the amount of your shortfall charged to you as income by the Internal Revenue Service. For example, if you are $100,000 short, the IRS will add $100,000 to your income for the year. That could move you up tax brackets and will certainly create a financial burden of the unexpected tax liability.
If you wish to avoid that situation, consider the timing of a short sale. It generally takes 60 to 90 days to get short sale approval. After that you'll need 30 to 45 days to go through the escrow process. Of course it takes time to get the property under offer before all of this, i.e.- 30-60 days. You can see that if you are going to close by the end of the year you are running out of time.
Understand, the tax relief matter may be a pawn of the election efforts this year, but we won't know what will happen while the political posturing transpires between now and the election in November. If it takes that long to resolve the matter you won't have enough time to get on the market, complete the short sale approval process and close an escrow. You must act now to control your financial future. You can see the current IRS ruling at: http://www.irs.gov/individuals/article/0,,id=179414,00.html/ .
Our Advice: If you can hang on you can take your chances on the tax law being extended and the market coming back in the near future. There are three major assumptions in the previous sentence. You have to be able to hang on, have the law extended, and have the market come back. Is it worth the financial risk, stress and emotional toll that you will be living with? Only you can make that decision. If, however, you are looking to buy again in the near future, wish to maintain your security clearance or other job related qualifications, and don't want the risk of protracted collection dealings with the IRS and its representatives you should seriously consider getting your home on the market with an experienced short sale Agent.
You are the normal if you are upside down in your home. Things are changing, but your situation is still unique to you and your circumstances. Don't play ostrich - pay attention to your options. Make a plan with your Agent and work it.
When it comes to choosing professionals to assist you with your Northern Nevada real estate needs... Experience is Priceless!
Lisa Wetzel and Jim Valentine are real estate agents with RE/MAX Realty Affiliates in Gardnerville. They are short sale and foreclosure specialists and Certified Distressed Property Experts.
Contact them at
Critical Short Sale Timing
Lisa Wetzel and Jim Valentine RE/MAX Realty Affiliates