REMI Advises Short-Sellers to Stay On the Market

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Following news that the fiscal cliff deal includes a tax break on short-sale debt forgiveness, the Real Estate Marketing Insider advises its readers undergoing short sales to keep their properties on the market, despite worries about decreasing short-sale numbers.

The Real Estate Marketing Insider issued a statement urging its readers who are hoping to short-sell their property, to keep their homes on the market. This announcement was prompted by news from Press Enterprise that the fiscal cliff deal passed by Congress last week would preserve a tax break for property owners who short-sell a property.

Last week’s deal by Congress to avert the “fiscal cliff” of across-the-board tax hikes and spending cuts had many components, including the extension of some tax cuts and gradual budget trimmings in many government areas. One of the most important components for real estate professionals, though, is the one-year extension of a tax-exemption clause on short sales and loan modification, including principal reduction. Put simply, any mortgage debt that is forgiven – whether it’s a portion of debt lost in a loan modification or a complete mortgage loan forgiven in a short-sale – continues to be completely exempt from taxation for another year.

This is important news for real estate, including for homeowners in short-sale or loan distress and brokers whose real estate marketing services cater to owners of distressed properties. While the market share for short sales and foreclosures dropped slightly in the last month, many banks and lenders were holding out on the escrow payments from short sales in anticipation of the tax break’s expiration. This had led many underwater homeowners to withdraw their homes from a short-sale and consider foreclosure.

However, the extension of this tax break has some important implications. First, banks will be less tight-fisted with escrow payments to short-sellers, and they will see their money faster. Secondly, the increased presence of short-sale homes on the market will help drive up a short sale’s viability; and this effect will take place as its being reported that short-sale prices are rising. REMI advises its readers who are in a short-sale, or who were on the fence about short-selling their property, to take the leap with confidence. With the extension of this tax break, a short-sale will be a strong option for distressed homeowners, and could help them avoid foreclosure and save thousands of dollars.

The Real Estate Marketing Insider issued a statement urging readers who are in a short-sale, or on the fence about a short-sale, to follow through, advising that it could be a good idea; certainly better than foreclosure. This announcement was prompted by the extension of a tax break for forgiven mortgage debt in the fiscal cliff deal passed by Congress early last week. Prior to the deal, many banks had been withholding escrow payments to short sellers, prompting many short sellers to consider foreclosure as an easier option.

The Real Estate Marketing Insider is an online trade journal for real estate professionals and homeowners. Agents and homebuyers around the globe trust REMI for up-to-the-minute news, analysis, and business or marketing tips.

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