How To Handle This...suggestions?

[JerseyJeff 0]

Hmm. You must inform the lender that you do not want a deficiency judgement brought against your seller at a later time. A deficiency judgement is the difference between the full mortgage amount and the short sale amount. The lender has a right to sue your seller for the lost amount.

Should this be put in writing in their packet that they send me?

 

Another thing that will happen and you cannot prevent it: The IRS will issue a 1099 to your seller for the gain in equity position from the short sale as if it was income to him. It isn't your problem since you most likely will never see this seller again

I'm assuming you don't tell this to the seller. Most contracts have disclaimers/waivers that you are not a lawyer and that the seller should seek legal counsel before entering into the agreement. I'm sure one could be put in there for tax advise/ramifications as well, if it isn't already in there.

 

You are selling on contract so don't worry about it. Your buyer will get a title report done.

Good to know. So just call the lenders that he states have a lien against the home. In the example of the construction company he owes 28K to, I don't think they have it secured against the home, so would I just forget them, or as good faith and good business, try to short sale them as well?

 

I would sell at slightly below market value eventhough I contracted for the short sale amount.

Why? Because you're already making a decent profit and want the home to move fast?

 

To handle earnest money, write down the amount of earnest money on the contract and include the following words, Payable at Closing The reason for this is if there is no closing, the contract is defaulted and you owe nothing to the seller.

Earnest money is the money paid that makes the contract legal?

 

For option information, you can address your question to MichaelC. He is the pro on this forum so he should be consulted for this information.

If you're getting a contract, there shouldn't be any option money involved, correct?

 

Thanks,

Jeff

[JerseyJeff 0]

Hmm. You must inform the lender that you do not want a deficiency judgement brought against your seller at a later time. A deficiency judgement is the difference between the full mortgage amount and the short sale amount. The lender has a right to sue your seller for the lost amount.

Should this be put in writing in their packet that they send me?

 

Another thing that will happen and you cannot prevent it: The IRS will issue a 1099 to your seller for the gain in equity position from the short sale as if it was income to him. It isn't your problem since you most likely will never see this seller again

I'm assuming you don't tell this to the seller. Most contracts have disclaimers/waivers that you are not a lawyer and that the seller should seek legal counsel before entering into the agreement. I'm sure one could be put in there for tax advise/ramifications as well, if it isn't already in there.

 

You are selling on contract so don't worry about it. Your buyer will get a title report done.

Good to know. So just call the lenders that he states have a lien against the home. In the example of the construction company he owes 28K to, I don't think they have it secured against the home, so would I just forget them, or as good faith and good business, try to short sale them as well?

 

I would sell at slightly below market value eventhough I contracted for the short sale amount.

Why? Because you're already making a decent profit and want the home to move fast?

 

To handle earnest money, write down the amount of earnest money on the contract and include the following words, Payable at Closing The reason for this is if there is no closing, the contract is defaulted and you owe nothing to the seller.

Earnest money is the money paid that makes the contract legal?

 

For option information, you can address your question to MichaelC. He is the pro on this forum so he should be consulted for this information.

If you're getting a contract, there shouldn't be any option money involved, correct?

 

Thanks,

Jeff

[transactionsengineer 0]

Jeff,

 

Should this be put in writing in their packet that they send me?

If it is not on the paperwork, you must physically talk to the person handling the short sale for the financial institution to make a note not to come after your seller with a deficiency judgement.

 

I'm assuming you don't tell this to the seller.  Most contracts have disclaimers/waivers that you are not a lawyer and that the seller should seek legal counsel before entering into the agreement.  I'm sure one could be put in there for tax advise/ramifications as well, if it isn't already in there.

You are not his accountant or tax advisor. It is not your job to inform him of this. You are doing the seller a favor by requesting that a deficiency judgement not be brought against him.

 

In the example of the construction company he owes 28K to, I don't think they have it secured against the home, so would I just forget them, or as good faith and good business, try to short sale them as well?

 

A construction company is more educated in securing money. When you do the title search, you will probably find a lien placed against the home to secure a position. It is good business to make an offer to them. Maybe you will use them in the near future.

 

Why?  Because you're already making a decent profit and want the home to move fast?

You answered the question yourself.

 

Earnest money is the money paid that makes the contract legal?

You know this topic better than you led on.

 

If you're getting a contract, there shouldn't be any option money involved, correct?

Sorry, there is no option money in a contract. You make your profit going into the deal and you realize that profit when you sell the property.

 

Since you did send me a private message for a copy of my contract, I've attached it here for you and anyone else who wants to download it. This is a contract I designed for New Jersey specifically. Please note my disclaimer on the first page.

 

Get out there and make the deal happen.

 

Daniel

NJ_Contract_for_Sale.pdf

[JerseyJeff 0]

You are not his accountant or tax advisor. It is not your job to inform him of this. You are doing the seller a favor by requesting that a deficiency judgement not be brought against him.

I apologize. I was referring to the

Another thing that will happen and you cannot prevent it: The IRS will issue a 1099 to your seller for the gain in equity position from the short sale as if it was income to him. It isn't your problem since you most likely will never see this seller again

 

When you do the title search, you will probably find a lien placed against the home to secure a position.

I thought you said

You are selling on contract so don't worry about it. Your buyer will get a title report done.

 

Thanks,

Jeff

[transactionsengineer 0]

Jeff,

 

You have no responsibility to the seller, other than your transaction. The deficiency judgement is part of your short sale arrangement. The IRS 1099 is not.

 

Your buyer will get a title report done when purchasing. If you choose to get a title report, you would see the construction loan on the report as a lien.

 

Go and make your contract with the seller. Realize your profit when you sell the property.

 

Daniel