Selling a Home in Arizona



Selling your home is an involved process that affects your family and your future.  Before you begin this process, you'll want to ensure that you have the most up-to-date information.  When should you sell?  How do you get the best price? What kinds of renovations should be made prior to the sale? 

These home selling reports will assist you in answering the many questions that arise during the home selling process.  When you're armed with the right information, and an experienced real estate professional, you'll be closer to reaching your goal - selling your home fast, and for the best price.

Please contact me if you have any questions about selling your Laveen home. 


Below, select desired reports and complete the form provided.

Surviving the Sale
Getting a good price for your home is important, but minimizing stress and simplifying the selling process can be just as essential.
The Right Selling Price
When you’re selling your home, the price you set is a critical factor in the return you’ll receive. Learn several factors to base the assessment of your home.
Common Selling Mistakes
Learn the top nine selling mistakes, and what steps you can take to avoid them.
Selling Your Home
Remember what first attracted you to your house when you bought it? What excited you about its most appealing features? Now that you're selling your home, you'll need to look at it as if you were buying it all over again.
Home-seller Mistakes
7 deadly mistakes can cost you literally thousands of dollars if you're not aware. Bonus report included.
What You Need to Know to Pass Your Home Inspection
Knowing what to look for can help you prevent little problems from growing into costly and unmanageable ones. If you're planning to put your home on the market within the next 12 months, request a free copy of this report.
27 Valuable Tips You Should Know to Get Your Home "SOLD"
To better understand the homeselling process, a guide has been prepared from current industry insider reports. 27 Valuable Tips you will discover.
First Name: 
Last Name: 
Email: 
Phone: 
Comments: 
 
* * Maximum of 2000 characters


Short Sale Your Home


Are you facing a situation where you need to sell your home for less than is owed and you just don't have the financial ability to pay? In most cases the goal is to prevent a foreclosure. A foreclosure will have a greater impact on your credit score and ultimately the cost of many services that depend on credit to establish the amount you pay for these services. By selling your home at a price that will be acceptable to the lender you can escape a foreclosure and have the lender give debt forgiveness.  
Many of us today are facing this big problem and few have any experience to know what to do. As unfortunate as this experience is, you still need to arm yourself with information to make the most of it. This article will provide some basic information on what to do and how to work with your Realtor® to achieve your ultimate goal. A Realtor who has the knowledge and time to work with the lender or servicing agent of the lender can be invaluable to your success.
An experienced Realtor is going to want to know the answers to some questions to determine what your current situation is.
  • Is there a foreclosure notice and date?
  • Is there a second mortgage or line of credit? Also was the 2nd or line of credit used to purchase the home or additions to the home (this has a tax implication which the seller should look into with their tax pro or CPA).
  • Are the loans with the same or different lender?
  • The seller will need to fill out a hardship letter and submit it to the lender? They must be willing to do this to have the lender accept a short sale.
  • Has the seller contacted the lender(s) as soon as possible to see if the loan can be reworked in a way that remove the need to sell as a short sale. A seller that can get the loan modified or adjusted in some other way changed to remove the need for a short sale can be far more beneficial.
  • Has the seller talked to their tax professional or CPA on tax consequences of Debt Forgiveness?
  • Is everyone on the home loan(s) in agreement on the short sale?
  • Has the seller received notices from the lender and what do they indicate?
  • Copies of loan statements available? Foreclosure notices?
Once the seller and Realtor have reviewed the current situation, the seller needs to make sure the Realtor has the experience to negotiate the sale and the list price for the property. When an agreement has been reached to list the home, both the Realtor and Seller now have to begin the work of getting the property marketed, initiate contact with the lender and finalizing the process to complete the sale. Let’s start with initiating contact with the lender.
First you must contact the lender's "Loan Mitigation or Short Sale Department” to get their contact information. Typically this department will need the following information:
1.    Letter to the department from the lender indicating the Realtor is authorized to help you in the sale of the property. You should have the property address, loan number, agent (brokerage, name, address and contact information) on the letter to complete the authorization. In some cases the lender may have their own form to use.
2.    A hardship letter which indicates why you can't make the payments. This does not have to be long or wordy, just a statement of the facts of your financial distress. You may want to include major bills like medical, dental or changes in job or other information to support your expense claim. Be sure to sign this page.
3.    The last 30 days of paystubs to show income.
4.    The last two months of bank statements and make sure you have the whole statement.
5.    Budget of Financial statement so the income and expense can be compared. Your lender may have their own form, but in essence you will have one column with expenses and one column with regular income (don’t include income that is occasional). Be sure to sign this page.
6.    Two previous years of tax returns (1040 only).
This material can be submitted to the lender at this time and typically at the beginning of the process. More than likely, the lender will hold on to it until a contract has been submitted. If the evaluation takes more than 2 months, the financial information may have to be updated with the latest information. It may take from 2 to 10 business days to have the information scanned into their systems and ready to be viewed by the Short Sale department.
Now you (or your Realtor) are ready to execute on your marketing plan and get a buyer. Don't forget to make it very obvious that this is a short sale in all your marketing materials. I would suggest that you make sure the buyer’s agent has their buyer fill out the short sale disclosures so that everyone knows that the process may take much longer than a normal sale. Patience is the key word.
Once there is a contract in hand and it is complete with all counters and addendums, it’s time to begin working with the lender to make sure they have all the information needed and ready for the time a processor will be assigned. If the package is incomplete in anyway, it will not be assigned to a processor. This can take 10 to 30 business days.
When you (or your Realtor) has the contract and supporting information, the agent should prepare their price opinion letter to support the contract price that is to be submitted. A price opinion should have the following information:
  • Description of the property - MLS document from current listing or previous would help.
  • Condition of the neighborhood and is it declining, stable or growing.
  • Photographs of the property and of any special situations that can be observed.
  • Maintenance that might be needed and estimates of the repair or deferred maintenance.
  • Current market conditions
  • Net sheet or HUD (with contract price)
The information you have put together should be faxed to the Loan Mitigation (ie, Loan Negotiation, etc) department. It is important that the loan number be placed on each and every page that is faxed to the lender. Pages that cannot be quickly identified to a specific loan may be shredded. This can delay the whole process since a negotiator will put aside the short sale documentation if it is not complete. It is also important to realize that each lender has a specific process. Some lenders may use one negotiator for the whole process, what is becoming more common are multiple negotiators who are responsible for different stages in the process.
Working with a negotiator requires that you fit your communication style to fit their needs. Flexibility is the key to success. Once a negotiator has reviewed the materials you have sent, they will make up a demand letter that is sent through their system for approval. When you receive the demand letter it will reflect how much they are willing to take, expenses they are willing to pay and any other condition(s) that must be adhered to in order to complete the sale.
The demand letter can make or break a sale. As an example, if the buyer wants to have their closing cost paid from the seller, the demand letter may state an amount for all expenses.  That does not support what if on the estimated HUD statement under seller paid expense. At this point the parties have several options. The buyer can decided not to accept the deal and cancel. The owner and seller of the property can make up the difference (don't count on this happening). The buyer can change their offer to bring the seller's cost in line with the demand letter by picking up the costs themselves. Note that this will create another HUD statement which must be sent back to the negotiator and could create additional delay. The Negotiator may have to do a new demand letter adding days or weeks to the final approval.
Finally, all parties have a contract and resulting HUD that meets the needs of the lenders demand letter. The last step of the process is to send the final HUD showing all final payoffs with the demand letter to the negotiator to show that all conditions have been met. The Negotiator sends back final approval, the deed is recorded and now the buyer is ready to move in to their new home.
Sounds complicated, it can be. I have not been fortunate enough to have every step go smoothly. Everyone seems to have at least one major glitch and some minor ones. That’s why you need someone who is willing to work the system, be considerate of all players in the highly emotional process, and be flexible enough to keep the deal moving. No one wins when the purchase is not completed.

Give me a call if you have any questions or comments on the short sale process. Everyone I do is a new learning experience. Let me help you through this period as your representative. This information is provided to help distressed home owners understand their options in dealing with mortgage issues. For more information be sure to contact your legal, tax, and credit professionals.


Taxes and Foreclosure


 

IRS Provides Tax Information on Home Foreclosure

The Internal Revenue Service ("IRS") has recently provided information to taxpayers about the possible tax consequences resulting from a home foreclosure. The general rule is that when a lender forgives a portion of a loan, the amount of debt cancelled constitutes taxable income for the taxpayer. The IRS website highlights the exceptions to this rule, so taxpayers can consider their options before their property is foreclosed by the lender. The IRS also recommends that the taxpayer may want to consult with a tax professional, as devising a structure to limit the taxes resulting from a foreclosure is a complicated process. Some of the exceptions are:

* debt is discharged in bankruptcy

* an insolvent taxpayer (defined as a taxpayer whose debts exceed his/her assets) may not have to recognize all of the discharged debt on his/her tax return

* cancellation of qualifying farm debts

* cancellation of a nonrecourse loan

If the taxpayer’s property is foreclosed, the taxpayer will receive a Form 1099-C from the lender. The IRS urges taxpayers to review the Form 1099-C to make sure it is accurate. If the taxpayer is unable to pay the taxes arising from a foreclosure, the IRS describes the process for making an "Offer-in-Compromise" to the IRS, which may relieve the taxpayer of a portion of the debt and/or create a payment plan for the taxes.
Questions and Answers on Home Foreclosure and Debt Cancellation

1. What is Cancellation of Debt?

If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

2. Is Cancellation of Debt income always taxable?

Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.

Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets.Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.

Certain farm debts:If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.

Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.

3. I lost my home through foreclosure. Are there tax consequences?

There are two possible consequences you must consider:

Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)

A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)

Use the following steps to compute the income to be reported from a foreclosure:

Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)


1. Enter the total amount of the debt immediately prior to the foreclosure.___________
2. Enter the fair market value of the property from Form 1099-C, box 7. ___________
3. Subtract line 2 from line 1.If less than zero, enter zero.___________

The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

 

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure ________
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ____________
6. Subtract line 5 from line 4. If less than zero, enter zero.

The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.

4. I lost money on the foreclosure of my home. Can I claim a loss on my tax return?

No. Losses from the sale or foreclosure of personal property are not deductible.

5. Can you provide examples?

A borrower bought a home in August 2005 and lived in it until it was taken through foreclosure in September 2007. The original purchase price was $170,000, the home is worth $200,000 at foreclosure, and the mortgage debt canceled at foreclosure is $220,000. At the time of the foreclosure, the borrower is insolvent, with liabilities (mortgage, credit cards, car loans and other debts) totaling $250,000 and assets totaling $230,000.

The borrower figures income from the foreclosure as follows:

Use the following steps to compute the income to be reported from a foreclosure:
Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)

1. Enter the total amount of the debt immediately prior to the foreclosure.___$220,000__
2. Enter the fair market value of the property from Form 1099-C, box 7. ___$200,000__
3. Subtract line 2 from line 1.If less than zero, enter zero.___$20,000__

The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __$200,000__
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ___$170,000__
6. Subtract line 5 from line 4.If less than zero, enter zero.___$30,000__

The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.

In this situation, the borrower has a tax-free home-sale gain of $30,000 ($200,000 minus $170,000), because they owned and lived in their home as a principal residence for at least two years. Ordinarily, the borrower would also have taxable debt-forgiveness income of $20,000 ($220,000 minus $200,000). But since the borrower’s liabilities exceed assets by $20,000 ($250,000 minus $230,000) there is no tax on the canceled debt.

Other examples can be found in IRS Publication 544, Sales and Other Dispositions of Assets, under the section "Foreclosures and Repossessions".

6. I don’t agree with the information on the Form 1099-C. What should I do?

Contact the lender. The lender should issue a corrected form if the information is determined to be incorrect. Retain all records related to the purchase of your home and all related debt.

7. I received a notice from the IRS on this. What should I do?

The IRS urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency.

8. Where else can I go to get tax help?

If you are having difficulty resolving a tax problem (such as one involving an IRS bill, letter or notice) through normal IRS channels, the Taxpayer Advocate Service may be able to help. For more information, you can also call the TAS toll-free case intake line at 1-877-777-4778, TTY/TDD 1-800-829-4059.

In some cases, you may qualify for free or low-cost assistance from a Low Income Taxpayer Clinic (LITC). LITCs are independent organizations that represent low income taxpayers in tax disputes with the IRS. Find information on an LITCs in your area.