Short sale of my rental

[PerryChase]

Rustico, does the contract require showing? I need to read it first. (I’ve not rented since my college days so I don’t know if that’s a standard provision of rental agreements these days).

Do you need the rent money? I think you need the money more than I need the house. Aren’t you the one attempting a short sale?

(Hope you don’t mind my sense of humor)

[PerryChase]

Rustico, does the contract require showing? I need to read it first. (I’ve not rented since my college days so I don’t know if that’s a standard provision of rental agreements these days).

Do you need the rent money? I think you need the money more than I need the house. Aren’t you the one attempting a short sale?

(Hope you don’t mind my sense of humor)

[NotCranky]

(Hope you don’t mind my sense of humor)

One must be able to take what one dishes out.

Yes I knew you had a comeback. There are variables. Notice can be given for any reason, except some forms of prejudice. You don’t have to say the reason but selling a house is a good enough one if you do.

“Do you need the rent money? I think you need the money more than I need the house. Aren’t you the one attempting a short sale?”
I do have to sell it and its hard to do with a hostile non- door opening tenant.
Could be, maybe I will move back in or have another tenant. Maybe I don’t care.Do most tenants like this much conflict?I think most will just put up with it, with or without some display of tension or move.

Tenants probably don’t have to show the place and very some times a listing will show that a hostile tenant is present and a signed offer is a condition of seeing the property.

[NotCranky]

(Hope you don’t mind my sense of humor)

One must be able to take what one dishes out.

Yes I knew you had a comeback. There are variables. Notice can be given for any reason, except some forms of prejudice. You don’t have to say the reason but selling a house is a good enough one if you do.

“Do you need the rent money? I think you need the money more than I need the house. Aren’t you the one attempting a short sale?”
I do have to sell it and its hard to do with a hostile non- door opening tenant.
Could be, maybe I will move back in or have another tenant. Maybe I don’t care.Do most tenants like this much conflict?I think most will just put up with it, with or without some display of tension or move.

Tenants probably don’t have to show the place and very some times a listing will show that a hostile tenant is present and a signed offer is a condition of seeing the property.

[HLS]

Perry,,no problem with your humour 😉

I’m sure that lender knows it’s a rental.
The statements are probably sent to a diff address.

In many cases today, when people refer to the “lender”, it’s actually just a servicing company.
The paper on this ARM was probably sold off on Wall St.

The servicing company collects the payments and files NOD’s etc. It’s a boring job these days, but it’s job security.

When “short sale” offers are submitted, nobody jumps at them. They can sit around for weeks without an answer.
It’s not a priority, although you’d think it would be.

Presenting a SS offer with a 48 hour deadline probably goes into the trash pile.

There are entry level people in some positions that just shuffle files around. They don’t have the authority to make a decision.

I still wonder why they are called SHORT SALES. The IRS calles it “Debt Relief”
Short Sales only refer to stock market shorts in the outside world.

[HLS]

Perry,,no problem with your humour 😉

I’m sure that lender knows it’s a rental.
The statements are probably sent to a diff address.

In many cases today, when people refer to the “lender”, it’s actually just a servicing company.
The paper on this ARM was probably sold off on Wall St.

The servicing company collects the payments and files NOD’s etc. It’s a boring job these days, but it’s job security.

When “short sale” offers are submitted, nobody jumps at them. They can sit around for weeks without an answer.
It’s not a priority, although you’d think it would be.

Presenting a SS offer with a 48 hour deadline probably goes into the trash pile.

There are entry level people in some positions that just shuffle files around. They don’t have the authority to make a decision.

I still wonder why they are called SHORT SALES. The IRS calles it “Debt Relief”
Short Sales only refer to stock market shorts in the outside world.

[PerryChase]

I just checked the agreement on my rental and I don’t have that provision. Something to remedy.

If were a tenant, I’d be pissed if 6 months into the agreement I were asked to show the house. I’d go to court rather than let some strangers disrupt my life.

Just finished watching WSJ with Bartiromo. The housing slump was big news. Her final advice is “buy the house you love, never time the market.” She repeated that several times. Sounds like an ad for the REIC.

[PerryChase]

I just checked the agreement on my rental and I don’t have that provision. Something to remedy.

If were a tenant, I’d be pissed if 6 months into the agreement I were asked to show the house. I’d go to court rather than let some strangers disrupt my life.

Just finished watching WSJ with Bartiromo. The housing slump was big news. Her final advice is “buy the house you love, never time the market.” She repeated that several times. Sounds like an ad for the REIC.

[sakina96]

This house has been on the market for almost four months. Since we didn’t want to move and the landlord has generally been nice to us we did our part to facilitate the house being shown (kept it extra clean, arranged to let realtors in since we didn’t want a lockbox). I’m not aware of any NOD on the house but I wouldn’t be shocked if it happened. I think someone put an offer on the house Friday. The fact that it was an offer with a 24 hour expiration makes me wonder if it is only the seller and agent that seem to know (or think) this is a short sale. The MLS listing also does not mention a short sale (although I don’t have access to confidential remarks.

[sakina96]

This house has been on the market for almost four months. Since we didn’t want to move and the landlord has generally been nice to us we did our part to facilitate the house being shown (kept it extra clean, arranged to let realtors in since we didn’t want a lockbox). I’m not aware of any NOD on the house but I wouldn’t be shocked if it happened. I think someone put an offer on the house Friday. The fact that it was an offer with a 24 hour expiration makes me wonder if it is only the seller and agent that seem to know (or think) this is a short sale. The MLS listing also does not mention a short sale (although I don’t have access to confidential remarks.

[HLS]

Even if Short Sale is mentioned in a listing, it is a hope & prayer of the agent, so they can earn a commission.
If your landlord hasn’t submitted a hardship package, they are probably wasting their time.

You don’t ask for short sale offers knowing what will be accepted. It’s a poor marketing myth, and I still think that plenty of real estate “pros” don’t know what they are doing. If the agent has been around less than 10 years, they’ve prob never been involved in one.

The next time you see the listing agent, ask them if they have EVER completed a short sale transaction, and ask them how long it took.

The 24 hour offer made Friday has already expired.
Now my bet is that they don’t know what they are doing.
If your landlord isn’t near broke, it isn’t going to happen.
He’s in a bad investment. Not the lender’s fault.

If I were you, I would ask for compensation for being inconvenienced when the property needs to be shown.
Like reduced rent or a cash amount each time.

I negotiated with a bank once on a home that they had foreclosed on. It took over 3 months from start to finish.
They took 3 to 4 weeks to respond to each offer. After my 2nd offer their reply was “we have nothing to discuss”
I loved it!
I bought the house several offers and counters later.

[HLS]

Even if Short Sale is mentioned in a listing, it is a hope & prayer of the agent, so they can earn a commission.
If your landlord hasn’t submitted a hardship package, they are probably wasting their time.

You don’t ask for short sale offers knowing what will be accepted. It’s a poor marketing myth, and I still think that plenty of real estate “pros” don’t know what they are doing. If the agent has been around less than 10 years, they’ve prob never been involved in one.

The next time you see the listing agent, ask them if they have EVER completed a short sale transaction, and ask them how long it took.

The 24 hour offer made Friday has already expired.
Now my bet is that they don’t know what they are doing.
If your landlord isn’t near broke, it isn’t going to happen.
He’s in a bad investment. Not the lender’s fault.

If I were you, I would ask for compensation for being inconvenienced when the property needs to be shown.
Like reduced rent or a cash amount each time.

I negotiated with a bank once on a home that they had foreclosed on. It took over 3 months from start to finish.
They took 3 to 4 weeks to respond to each offer. After my 2nd offer their reply was “we have nothing to discuss”
I loved it!
I bought the house several offers and counters later.

[Fearful]

Question about tax and short sales …

If debt is canceled, I understand the amount forgiven is considered ordinary income. Makes sense so far.

Now, you have a capital loss (presumably, otherwise debt would not be canceled) on the house. Can the capital loss be used to offset the ordinary income of the house sale? Or are you stuck with taking just $3K a year of capital loss against ordinary income … for the next, say, hundred years?

If you can offset immediately, then you don’t really have to worry about the income from the debt cancellation. If not, then I would bet most people can only exit foreclosure via bankruptcy. If you are so strapped for cash you cannot make the mortgage payments, it is hard for me to imagine you having the cash to pay the IRS.

[Fearful]

Question about tax and short sales …

If debt is canceled, I understand the amount forgiven is considered ordinary income. Makes sense so far.

Now, you have a capital loss (presumably, otherwise debt would not be canceled) on the house. Can the capital loss be used to offset the ordinary income of the house sale? Or are you stuck with taking just $3K a year of capital loss against ordinary income … for the next, say, hundred years?

If you can offset immediately, then you don’t really have to worry about the income from the debt cancellation. If not, then I would bet most people can only exit foreclosure via bankruptcy. If you are so strapped for cash you cannot make the mortgage payments, it is hard for me to imagine you having the cash to pay the IRS.

[HLS]

FEAR: perhaps a CPA will answer.
On your principal residence, I don’t know if you can write off the loss at all, if actually SOLD at a loss.

I think that $3K ONLY applies to stock market losses, to discourage speculation.

In a short sale, you are not receiving any money. Lender is agreeing to “settle” and your debt is being forgiven. The debt relief is reported as income, and you owe income tax. The debt is done. With a RENTAL, I believe that you are selling the property for what the lender reports, but if a rental, you have depreciation to recapture as well.

There is no ordinary income from the house sale, but I do THINK that you can write it off as an investment loss, (without $3K limit), and carry forward if necessary.

Foreclosure is viewed differently depending on whether or not it was purchase or refi loan that is being defaulted on.
There are also convoluted ways, like keeping your 1st current and let the 2nd default. Then the 2nd could takeover the 1st, without a default on the 1st.

Further, my belief is that BK will not absolve you of debt to the IRS.

This is the danger of a short sale that many don’t seem to be aware of. Receiving a 1099 isn’t a guarantee, but most people aren’t in a position to worry about that, or not do a short sale to avoid the 1099.

The lender doesn’t accept a SS just becuase you want them to, and for reasons mentioned previously, it’s not so easy on a rental property.

[Author]

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