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question, i am sure st has discussed this, but what are the issues with buying a home via a short sale?

Posted by tRuMaN (aka Truman) Mar 27 '11, 11:46

just curious, one i looked at today is a short sale. with a little bit of touchups, and maybe a bit of yard work, the house could probably go up in value 10-15%, but its a short sale.

Responses:

Based on my parent's househunting in Florida and mine in Chicago, I believe there are two different 'types' of short sale listings - ty97 Mar 27, 12:06 1
- the one i loooked at is supposedly a bank approved short sale -- nm - tRuMaN Mar 27, 12:09
Unless the banks have come to their senses and figured out it really is in their best interest to allow them to go through instead of hemming/hawing.. - zeitgeist Mar 27, 11:51 1
- Apparently, they are coming to their senses more and more in this regard. - psilotum Mar 27, 11:58
The time it takes is the major drawback. Even after a bank accept an offer, it might take months. -- nm - mara Mar 27, 11:48
I found this -- (link) - Beaker Mar 27, 11:48 15
- there seem to be potential tax ramifications and maybe legal... -- nm - Beaker Mar 27, 11:49 14
  - I think the tax ramifications relate to the seller. If the bank forgives a portion of the loan, that 'can' be considered income. - MojaveMeg Mar 27, 11:58 13
    - So, if you buy a car and you get a 'rebate' for several thousand in the mail later, is that income? -- nm - zeitgeist Mar 27, 12:00 11
      - you want theory or actually what happens? - tRuMaN Mar 27, 12:03 1
        
        how about a free flight for your airline miles? stay a few nights and get a free night? -- nm - zeitgeist Mar 27, 12:08
      - No, because that's a discount on the price of the car. The seller has reduced the price. But on a mortgage the bank is not the seller, they've only - MojaveMeg Mar 27, 12:03 5
        
        its still a post sale negotiation wherein the value of the house re-appraised based on new information, conditions -- nm - zeitgeist Mar 27, 12:11
        
        when you get a rebate on a car, you pay tax on the full amount, right? -- nm - amanda jones Mar 27, 12:06 3
        
        Not sure - but if you do, that's sales tax not income tax. -- nm - MojaveMeg Mar 27, 12:09 2
        
        right, that's my point. it's different taxation. -- nm - amanda jones Mar 27, 12:11 1
        
        and you're *paying* the full price -- you're just getting some back. -- nm - amanda jones Mar 27, 12:13
      - I don't see why it would be considered income when they are just renegotiating the sale price which can happen in other contracts -- nm - zeitgeist Mar 27, 12:02 2
        
        because it's reducing your existing obligation to pay the full amount of the mortgage -- nm - moles Mar 27, 12:13 1
        
        I think I am actually ok with shortages being income. I don't think sellers should be able to walk away with no ... whatever. -- nm - amanda jones Mar 27, 12:14
    - OTOH, my friends are buying an avocado orchard via a short sale :) -- nm - MojaveMeg Mar 27, 11:59

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question, i am sure st has discussed this, but what are the issues with buying a home via a short sale?

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