No Tax Penalty on California Short Sales

There has been lots and lots of chatter on the news lately and our phones has been ringing off the hook with Realtors® asking whether the Mortgage Debt Relief Act of 2007 has been extended. We’re gratified that you think of us first as the “all-knowing” when it comes to short sales. But… President Obama and other folks in politics actually don’t call us personally to notify us when important governmental changes home about.
Nevertheless, perhaps you’ve already heard that California homeowners will not face tax penalties when selling their homes as short sales, even though the Mortgage Debt Relief Act of 2007 is scheduled to come to an end on January 1, 2014.

What Is the Mortgage Debt Relief Act?

Initiated by President Bush, the Mortgage Debt Relief Act of 2007 is a tax break that saves certain struggling homeowners from paying taxes to the IRS for the amount of debt forgiven in a short sale, a foreclosure, or a deed-in-lieu of foreclosure. Even though the amount of debt forgiven is reported on the 1099-C, and sent to all borrowers, there are certain aspects of this tax act that preclude the short sale seller from the paying taxes on this forgiven debt. Prior to the enactment of the Mortgage Debt Relief Act of 2007, if the short sale lender forgave $50,000 in debt, borrowers were responsible for paying the income tax (on the $50k) at their current tax rate.

Recent Changes in California

California short sale sellers have been awaiting news as to whether or not the state tax board would follow the federal tax guidelines with respect to debt forgiveness. In fact, when the tax Act was extended, Californians were told that any forthcoming decision at the state level might be retroactive. As of just a few weeks ago, any Californians who participated in a short sale or deed-in-lieu of foreclosure in 2013 still did not know about their own state tax liability. Then, all of a sudden, things changed
As a result of a letter from Senator Barbara Boxer to the IRS, Californians now have clear guidance on the tax laws with respect to short sales. In November, Senator Boxer received a response from this IRS clarifying that California families who have lost their homes in a short sale will not be subjected to a tax penalty for debt forgiven after the federal law prohibiting such penalties expires at the end of this year, and the Franchise Tax Board has agreed with those clarifications.
Enacted in July of 2011, California has an anti-deficiency law that protects homeowners from lenders attempting to collect additional assets in the case of a closed short sale transaction. But until Senator Boxer wrote her letter, the IRS had not clarified how this might play out in California. Like many Californians, Senator Boxer noted that with the end of the Mortgage Debt Relief Act of 2007 just around the corner, “…distressed borrowers may face the unfortunate incentive to go to foreclosure rather than seek a short sale in order to avoid a large tax bill.”
The IRS reply clarified that California families will not face burdensome tax penalties as a result of participating in a short sale—specifically because of the state anti-deficiency statutes. After the IRS clarification, the Franchise Tax Board (on December 6, 2013) made a public statement that they will align their guidelines with those of the IRS.
According to the California Association of Realtors®, there are approximately 55,000 anticipated short sales in 2014 in the state of California, so the letter from the IRS and the Franchise Tax Board statement are good news for those distressed borrowers still on the fence about selling as a short sale.
In a recent Forbes article, Peter Reilly points out that all Californians might not want to do jump for joy just yet. Reilly states, “there are situations where this rule might work against the taxpayer, particularly those who borrowed against property after it appreciated.” He goes on to outline a few of those situations and points out that some of the various exceptions to recognizing debt discharge (including insolvency) will no longer be available remedies.

So, What About Alaska, Hawaii, and the Rest?

Since the argument put forth in the IRS letter specifically relates to California’s anti-deficiency law, it stands to reason that if you live in another state that has an anti-deficiency law, the same logic might apply. But, please don’t take my word for it, and do your due diligence. Why not contact your local congressman and have him or her make an inquiry on your behalf?

by Melissa Zavala on December 16, 2013 of Short Sale Expeditor

Price Appreciation Beginning to Slow

The U.S. housing market has experienced excellent price appreciation with values increasing by double digits over the year before. However, as professionals, we must warn sellers that prices are not now appreciating at big levels on a month-over-month basis.
 

The map below was created using data from CoreLogic’s latest Home Price Index. It reveals that price appreciation is slowing and in some regions is turning toward the negative.. This is not anything with which to be overly concerned. Prices normally slow at this time each year
 

However, we must have intelligent conversations with our homeowners explaining that waiting to sell in hopes of attaining substantially higher prices by Spring probably makes no sense.

 

by The KCM Crew on December 16, 2013

Top 5 Reasons for Buying

FSBOs Must Be Ready to Negotiate

 

In a recovering market, some sellers might be tempted to try and sell their home on their own (FSBO) without using the services of a real estate professional. The real estate agent is a trained and experienced negotiator. In most cases, the seller is not. The seller must realize the ability to negotiate will determine whether they get the best deal for themselves and their family.
 

Here is a list of some of the people with whom the seller must be prepared to negotiate if they decide to FSBO:

 

• The buyer who wants the best deal possible
• The buyer’s agent who solely represents the best interest of the buyer
• The buyer’s attorney (in some parts of the country)
• The home inspection companies which work for the buyer and will almost always find some problems with the house.
• The termite company if there are challenges
• The buyer’s lender if the structure of the mortgage requires the sellers’ participation
• The appraiser if there is a question of value
• The title company if there are challenges with certificates of occupancy (CO) or other permits
• The town or municipality if you need to get the Cos permits mentioned above
• The buyer’s buyer in case there are challenges on the house your buyer is selling.
• Your bank in the case of a short sale

                                                                              

Spooky Real Estate Stories - Enjoy!

 

NAR asked practitioners for their supernatural real estate stories and got some truly bone-chilling tales from the trenches. October 2013 | By Meg White

On Friday, Sept. 13, NAR Director of Social Business Practice Heather Elias asked those following NAR’s Facebook page for “spooky or superstitious real estate stories.” She got more than just a few stories about haunted listings and other strange happenings.

I had a home on the market that was built in the late 1700s. The seller was putting his mom’s former home on the market, and it was vacant. Every Monday morning, I noticed a drip line running from the countertop across the fireplace to a doorway in the kitchen. I cleaned it up about three times. Finally, I called someone in to take a look at it. Turns out the substance was oil from an old oil lamp. But the house didn’t have any such lamps anymore. One Monday, as I was cleaning the drip line once again, I said aloud, “If you want me to find you a nice new family to live here, you’ve got to stop doing this or you will frighten them off.” The oil never appeared again, and the new owner has never seen it either.
—Lisa Lemieux Antanavica

In the ’80s, I listed an old Victorian home in Palestine, Texas. When I got there to take pictures for the new listing, it was completely empty. There was a beautiful arched doorway leading from the kitchen to the dining room, and I got an especially good shot of it, because I thought it was one of the best features of the home. In those days, we did not have camera phones and had to actually take our film in to have it developed. Two days later, I was looking through the photos and came to one photo that sent chills up and down my spine. Standing in that arched doorway was a young girl that absolutely had not been in that house at the time I was taking the photo. I lingered so long when taking that picture, and it was impossible for me to have missed someone standing there. The little girl in the photo was staring directly at me.
—Dee Banks

I was previewing a house that was supposed to be vacant, so I took my husband with me. When we got to the house, there seemed to be a very lonely feeling about it. When I opened the door, I swear I heard someone say, “Get out.” I asked my husband if he said anything, and he said no. So, as we walked around this house, the feeling got more intense. We would turn a light on and head to another room, and then realize that the room we just left would be dark. I kept hearing whispers, and I kept trying to get my husband to admit it was him. I kept thinking he had to be messing with me. In the kitchen, I was so ready to just say, “Let’s get out of here.” Suddenly, my husband turned to me and said, “You need to stop saying that; stop messing with me. Let’s just go; something’s wrong with this house.” My husband is a really serious guy, so at this point I was running for the door.
—Gidget Janz

I viewed a broker’s open house where a murder had been committed in the home. As I walked through the home, my knees became very weak as I set foot where the body was discovered, and they almost buckled on me. It was a weird feeling I had never experienced before.
—Cecile Ann Clayton

My client and I were viewing this older house one winter evening. The street light was very dim, and the house had a very segregated layout on the main floor so my client and I were separated most of the time. Lots of the lights in the house didn’t work, and a strange beeping sound came from the security system. All the bedrooms had a ceiling light in a corner, so the rooms were not well lit. Also, there was a full-length mirror on the wall right across from the door in every bedroom, so as soon as you opened the door you would see yourself in the mirror. My client and I became increasingly uneasy, so we decided to leave. I started to turn off the lights. As soon as we headed down to the main floor, the doorbell rang and there was a white face pressing on the main door glass peeking inside. Both my client and I screamed. I opened the door with my shaking hand and there was this young couple standing there yelling at us. It turned out that, since it was so dark on the street, my client had accidentally parked her car blocking part of the neighbor’s driveway. The neighbor had tried to drive in anyways and scratched his truck against the tree. So here we were, scared half to death and being cursed at. I never went back to that neighborhood again.
—Hong Wang

Getting Ready For A Move?

Check Out the Facts Below.

You'll Learn

• What are the best and worst days to move?
• What are the busiest months to move?
• What was the total weight moved in 2012?

Current Housing Market Slowing?

Have you noticed more open house signs in the Orange County area? Just the other day I was driving through North Orange County area and noticed how many more open house signs are out compared to just a few months ago. Let’s go back to the first half of this year; we had very low inventory and great mortgage rates which has made for strong competition with bidding wars on most homes.

Now that the Orange County housing madness is slowing due to several factors for the last half of this year, what does this mean for the value of your home? The average home price in Orange County for the month of August 2013 was $542,000 compared to one of the average home in August 2011 at only $459,000.

With the holidays approaching, mortgage interest rates are going up, real estate will be harder to move fast like we have been used to in the first half of this year. Just today, I got a call from another agent in this area asking if I had any leftover buyers on one of my properties that I just closed escrow on. You wouldn’t have heard of this just a few months ago, in fact, the chance of that agent calling other agents to find buyers would have never happened because they would have already had so many offers.

 

If you are considering selling your house in next few months, you need to make sure that you hire the right agent – it’s critical. Any agent can list your house, put a sign in the ground and tell you what you want to hear. But not all agents know how to sell when the market slows down. You need to make sure the agent has experience and knowledge in selling homes in a tougher market but also has the utmost integrity while doing it. How will you find this out? Talk with your family, friends, and neighbors to identify the best agents in area. Also, make sure you get referrals or testimonials from very satisfied past clients. Interview several agents – hire the one who you believe will do the best job for you.

For questions about buying or selling your property in the Orange County and surrounding areas, call Jodi Salazar - “JoSal your Real Estate Gal”at 714.612.6446 or visit her on the web at www.HomesByJoSal.com.



                 

10 Facts About Chuck Norris' Home For Sale in Dallas

 

Want to buy a home that criminals will think twice about breaking into? How about the Dallas home of the legendary Chuck Norris? The Mediterranean ranch-style home in the Northwood Hills neighborhood served as a studio for the filming of Walker, Texas Ranger, as well as the on-screen home of Norris’ character on the show. However, before you cough up the $1.2 million to buy it, here are some things you should know about the home.

10 Things You Should Know About Chuck Norris’ Dallas Home For Sale

- – - – -

1. Chuck Norris doesn’t just hawk the Total Gym XLS Home Gym in infomercials, he actually has one in his fitness room. It could be your fitness room for $1.2 million.

2. There are shutters on the windows that Chuck Norris opens during storms so tornadoes and lightning will see him and flee.

 

3. The antlers on the wall are from animals he chased down on foot, as is the cheetah-print rug on the floor.

4. Chuck Norris may hunt alone, but he doesn’t shop alone. He bought this house with his brother Aaron Norris.

VIA: FILMWEB.PL

5. These two chairs used to be the same size, but one shrank in fear from continually sitting across from Chuck Norris.

6. Chuck Norris takes his meals in the pool because he simultaneously eats and swims. Chuck Norris fears nothing, not even closing costs.

7. Chuck Norris decorates his bathroom with ceramic flowers and nobody makes fun of him. Nobody.

8. Chuck Norris has a double-door entryway so there’s room for grizzly bears to enter, wrestle him, and limp out defeated.

9. Chuck Norris prefers baths to showers because the only thing he fears is getting his hair wet.

10. Chuck Norris knows when you feed his dog under the table because Chuck Norris has powerful senses and also because his dining room table is made of clear glass.

Mortgage Rates are going UP!

 

Mortgage rates are continuing to rise, however are still so low compared to rates in the past years. Some of you may even remember when you bought your home and paid double digits on your mortgage interest rate.  

As mortgage rates continue to rise and they will (expected to hit 4.5% or more by the end of June), more buyers than ever are racing out to buy homes.  This is driving the home pricing above appraisal values in most cases. I truly believe by the end of this year this will stabilize the market somewhat. As an Orange County, CA Realtor®, I am already seeing more homes pop up on the market due to home owners looking to finally cash in on their homes since 2008. Some sellers don’t even realize that their homes are not even underwater anymore. 

I believe as more homes hit the market for sale with higher than normal values on their listing price, along with interest rates rising, this will start slowing the housing market. 

If you are thinking of selling your home, NOW may be the best time for you to take advantage of this market while it is still very HOT for home sellers, but make sure when you list your home to sell that your home it is within the range of surrounding properties. You don’t want your property to be the one that sits longer than the average number of days on such a hot seller's market and you soon become disappointed. “A house built on greed cannot long endure.” - Edward Abbey
If you live in the Southern California area and want to know more of a true value of what you may get if you sold your home, you can call me and I will do a No Cost Market Analysis for you with no obligation to sell. Also, if you think you may still be underwater on your home, you may be surprised that you are not anymore, so call me to today and I may have very good news for you!

Call Jodi “JoSal” at 714.612.6446 or you can visit me on the web at www.HomesByJoSal.com

 

Pocket Listings are Back! What you need to know about them.

As homeowners have been seeing a rise in their home values, we are seeing more “Pocket Listings” in North Orange County. What are pocket listings? A pocket listing is a property that doesn’t come onto the MLS (Multiple Listings System) until it’s already sold – a practice that’s rarely defendable expect for privacy reasons. In fact, it’s looked down upon your local MLS which has certain rules against it.

To go into more detail, pocket listings are where an agent keeps the listings “in his/her pocket” and shows only to their buyers. One issue is that by not exposing a home to the largest possible number of buyers, the seller may miss out on a better offer. With pocket listings, the number of people who see the home is much smaller, and the offers may not be as competitive. Since the agent has a fiduciary duty to get the highest and best price for their client (seller), they should publicize the property for sale on the MLS and cooperate with other brokers/agents to get maximum expose.

Why would a real estate agent have “pocket listings”? Every listing agent lives for the opportunity to “double-end” a transaction (Total Commission) —that is, to avoid giving up half his or her commission to a buyer’s agent. At, say, a 6% listing commission on a $400,000 home that could mean earning $24,000 instead of less than $13,000. If the real estate agent doesn’t advertise to other agents in the MLS, they are not acting against the best interest of their client and may be violating their fiduciary duty to the seller.

Some real estate agents throughout will offer a myriad of reasons as to why this is a beneficial option:

1. They have a small circle of friends for whom they think your home will be perfect and you won’t be inconvenienced by ongoing showings.
2. Real buyers recognize value without the necessity of marketing.
3. You will hear real feedback from qualified buyers.
4. You’ll receive valuable information without obligation – you can choose to sell, not to sell or to rent.

After reading the list, my only question is, “Beneficial to Whom?”
The agent because they have secured a listing? Certainly not the homeowner. Below is my response to each of the bullet points above.

1. Sale price = supply and demand…Period. An open market will bring more buyers and greater demand than the sphere of a single agent or Brokerage. Forty-six percent of buyers surveyed in 2012 said that they learned of the availability of the home that they purchased via the internet.
2. What value is it to the homeowner to proceed without marketing? It may save the brokerage marketing dollars, but is that your concern when selling your home?
3. This one is a “head scratcher.” Does this mean to imply that you won’t receive qualified buyers or real feedback if your home is placed on the multiple listing system? I sure hope not. It doesn’t say much about Realtors if it does.
4. The last one makes no sense and is simply false. If you have signed an Exclusive Right To Sell listing agreement and an agent brings in a buyer that meets the terms stated in the contract, you are basically placing yourself in double jeopardy should you decide not to sell. The agent who procured the buyer may be due a commission and the potential buyer may expect you to perform as well or face litigation.

I would caution you to going with an agent that suggests doing a “Pocket Listing” since this is an unethical practice. There is no law against having pocket listings, however an agent should always comply their local MLS rules and have a client’s written instructions to approve this.

Even in a hot seller’s market which we have today, the benefits of MLS exposure are in the best interest to any seller. A listing agent desiring to have pocket listings should always be upfront about this with their clients and the disadvantages this may have to them.

To hear more about this type of listing you can check out my video below. You can also visit me on Twittier and Facebook.

The Tables Have Turned in Southern CA - It's a Seller's Market!

Across the country and throughout Orange County, the real estate market has made some dramatic shifts in the last few months. Right here in North Orange County, the number of available listings has decreased so significantly that offers are being made and accepted before properties hit the MLS. Most homes are receiving multiple offers above asking price, which may demonstrate that the market is in an upswing. While this may appear to benefit sellers, the number of Orange County homeowners listing their property has already dropped 12%, which is the lowest it’s been in nearly nine years.

Even though some homeowners want to list their home—and it seems like the right time to do it—they need to ensure they have somewhere to go.

With this current market stabilizing and perhaps improving, North Orange County is reporting less short sales and foreclosures. This certainly seems like a good sign for things to come and is excellent news to homeowners. But, for those looking to buy, be it investors or first-time buyers, right now it’s all about who you know and who they know.

If you are looking to sell in your property, now is the time: buyers are looking, prices are on the rise and homes are selling fast. Just make sure you have somewhere to move before you sell!

 

For questions about buying or selling your property in North Orange County, and the surrounding areas, call “JoSal Your Real Estate Gal” at 714.612.6446 or visit her on the web at www.HomesByJoSal.com.