PROView - January 2008 - (Page 25) Handling a short sale transaction may be a rather treacherous undertaking and you need to protect yourself as well as your client. First, you need to look out for situations that may be fraudulent. For example, transactions should be arms length, meaning there should not be any existing pre-made arrangement or relationship between buyer and seller. A buyer offering money to a seller outside the contract is also fraud. “As a Realtor® you need to be very vigilant as to any possible fraud. If something appears suspect, it probably is,” cautioned Banville. “Work closely with a title agency and do not be afraid to consult an attorney or tax advisor to make sure everything is legal.” Another pitfall for a Realtor® is the possibility that homeowners may already have signed away their deed without even knowing it. Banville cautioned that there are different approaches in the marketplace where investors offer solutions to unsuspecting homeowners who later find out they’ve lost the deed to their home. While a Realtor® is certain to offer help and suggestions to a customer, Banville also cautions against making concrete statements. The outcome of a transaction is quite uncertain, she said, mentioning that in the end, lenders may not agree to a short sale. “It’s important to provide a realistic picture of what customers can expect without making promises,” commented Banville. “I have had customers ask how much money they will make – and I’ve instead explained that the reason for going through a short sale isn’t about making money but instead an effort to make the best of a difficult situation and avoid the potential of an even worse credit-damaging situation such as foreclosure.” Banville suggests providing detailed information up front about the responsibilities of the homeowner and what they can expect throughout the process. For example, a Realtor® should disclose that owners are responsible for utility bills and property maintenance, not the Realtor®. Proper disclosure of any such issues will avoid any possible conflicts and misunderstandings. While you should be cautious speaking about any possible tax ramifications yourself, your customer needs to know about any tax effects the short sale may bring. “I encourage homeowners to consult with both an attorney experienced with short sale as well as a qualified and experienced CPA. Not only does it help the customer to fully understand the implications of a short sale - it also helps minimize your liability. For example, forgiveness of debt has been deemed PINELLAS REALTOR® ORGANIZATION Looking Out for Potential Liabilities a taxable event in the eyes of the IRS. A homeowner would receive a 1099 from the lender to pay taxes on the forgiven amount. In December 2007, however, President Bush signed the Mortgage Forgiveness Debt Relief Act into law. A statement released by NAR commented: “Today’s bill will ensure that any debt forgiven on a mortgage secured for a principal residence will not be taxed.” Your best protection will be to make sure you have gathered all pertinent information, worked closely with all parties involved, and made sure to only handle issues you are trained to handle. There’s little doubt that managing a short sale may be a challenging endeavor for even the most experienced Realtor®. It may be a rather lengthy procedure before both you and your customer will know the outcome of your efforts, and the process is certain to be both highly emotional and frustrating for all parties. Not all short sale transactions have to be difficult, however. While some may be rather easy, others may be difficult. If you decide to handle a short sale, in the words of Banville “while helping a family through a short sale can be extremely gratifying, there are no guarantees.” IS YOUR HOME PREPARED FOR A FLOOD? Most people don’t realize that just inches of flood water can cost thousands in damage and unlike other natural disasters, floods aren’t covered by homeowners insurance. 727.344.4500 “We Can Help You and Your Clients” HOME • FLOOD • BUSINESS • COMMERCIAL • AUTO • LIFE Don’t risk your home, call me for flood insurance today. Insurance Services January 2008 25
Table of Contents Feed for the Digital Edition of PROView - January 2008 PROView - January 2008 Contents Chairman's Notes Feature ProActive Marketing Finance Marketplace Analysis Home Sales Report MLS Update MLS Mind Your Manners Education Calendar of Events & Programs PROBiz Special Feature Brokerage Design New Affiliates and Members for 2008 PROView - January 2008 PROView - January 2008 - PROView - January 2008 (Page Cover1) PROView - January 2008 - PROView - January 2008 (Page Cover2) PROView - January 2008 - Contents (Page 1) PROView - January 2008 - Chairman's Notes (Page 2) PROView - January 2008 - Chairman's Notes (Page 3) PROView - January 2008 - Feature (Page 4) PROView - January 2008 - Feature (Page 5) PROView - January 2008 - Feature (Page 6) PROView - January 2008 - ProActive (Page 7) PROView - January 2008 - Marketing (Page 8) PROView - January 2008 - Marketing (Page 9) PROView - January 2008 - Finance (Page 10) PROView - January 2008 - Finance (Page 11) PROView - January 2008 - Finance (Page 12) PROView - January 2008 - Finance (Page 13) PROView - January 2008 - Marketplace Analysis (Page 14) PROView - January 2008 - Home Sales Report (Page 15) PROView - January 2008 - MLS Update (Page 16) PROView - January 2008 - MLS Mind Your Manners (Page 17) PROView - January 2008 - Education (Page 18) PROView - January 2008 - Calendar of Events & Programs (Page 19) PROView - January 2008 - PROBiz (Page 20) PROView - January 2008 - Special Feature (Page 21) PROView - January 2008 - Brokerage Design (Page 22) PROView - January 2008 - Brokerage Design (Page 23) PROView - January 2008 - Brokerage Design (Page 24) PROView - January 2008 - Brokerage Design (Page 25) PROView - January 2008 - New Affiliates and Members for 2008 (Page 26) PROView - January 2008 - New Affiliates and Members for 2008 (Page Cover4)
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