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Investors: Short Sale Question

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Doug in NC

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Jan 17, 2002
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Certified Residential Appraiser
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North Carolina
Suppose a homeowner finds an investor to purchase their home about to go into foreclosure, but the purchase price is less than the loan payoff. Is this still considered a foreclosure on the seller's record?
 

Mr Rex

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Jan 12, 2004
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North Carolina
Its not a foreclosure, but there may be a deficiency judgement depending on the agreement between the short seller and the bank. Obviously most sellers will try to negotiate a short sale with the the bank forgiving the "short" amount, but this doesn't always happen, particularly if the seller has a decent income etc.
 

Restrain

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Jan 22, 2002
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Certified General Appraiser
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Florida
It is a "short sale", with a loss to the lender. The lender will record the loss, show it on the credit report, and will most likely send a 1099-MISC to the borrower for the difference.
 

3 Putt

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Aug 18, 2005
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State
Ohio
most likely send a 1099-MISC to the borrower for the difference.

That's the kicker most people don't know about. You are already knocked to the ground and then they kick you in the stomach. Tax time will be a shock to some people.
 

Thomas Fiehler

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Ohio
Todd-Wasn't there some talk from the IRS about them not taxing the difference between sale and note?
 

murray stroupe

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Apr 27, 2005
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General Public
State
Tennessee
Short Sale

It is a "short sale", with a loss to the lender. The lender will record the loss, show it on the credit report, and will most likely send a 1099-MISC to the borrower for the difference.
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Think they finally did change that tax law recently,RS;
not that the change will help the credit report, but the diference supposedly will not be taxed anymore.
 

Atlanta CG

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Jan 15, 2002
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Certified General Appraiser
State
Georgia
I believe the IRS changed that to run through 2009 or 2010 only.
 
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