No Federal Income Tax Due on Principal Mortgage Debt Forgiveness

Here is an innovative way the government is encouraging home owners to "short sale" their home (rather than be foreclosed upon) and helping keep them out of bankruptcy court.

The IRS has created an exemption from its general rule to treat debt forgiveness as ordinary income. In the past, a lender that reduced the payoff amount on a home would 1099 the Seller for the amount of debt forgiveness. Under the new law, there is no federal income tax due on debt forgiven on a loan that is secured by the Seller's principal residence, provided that the loan was made to acquire, construct, or substantially improve the principal residence.

A refinance of that type of loan also qualifies for the exemption.

Sorry, the rule doesn't apply if you pulled money out of your house to pay for something like a vacation and got debt relief on that loan.

The exemption applies to any portion of loan debt forgiven beginning January 1, 2007 through December 31, 2009. Put another way, it doesn't matter when the loan was made; what matters is when a portion of the debt is forgiven.

Spokane Short Sales Are Hard Work, But They Don't Have to "Suck"

We've been doing some reading online about "why short sales suck."

In one example, a real estate agent writes that he represented two well-qualified buyers on a moderately priced short sale. The listing agent (who represents the seller) in the transaction obtained approval from the bank within ten days...then called and said a "better" offer was on the table, effectively backing out of the contract thanks to language found in addendum RE 44 (which is not, as a matter of fact, required by Idaho law).

This is bad news all around--it has little to do with the transaction being a short sale.

Here's how we would have handled things as the listing agent: Once the bank accepted the first offer, we would never have let our clients get into a bidding war. It might be said that it is the listing agent's job to get the most money for the house. However, listing agents represent the seller, not the bank. In a short sale, if a listing agent has been successful in getting the bank to accept something, they should not introduce potential time delays.

Whiles the rules and regs are constantly changing, at the present time, if multiple offers are received before they are presented to the bank, then it only makes sense to write up the highest offer. But once the ball is rolling, only backup offers should be considered.

The writer/agent advised his clients not to move ahead, and he concludes with two parting thoughts:

"You’re much better off to find a clean, sharp home offered by a motivated seller who has enough equity to negotiate a fair deal with you.

[snip]

If you want/need to buy a home and get moved in, short sales are a total waste of time and energy for all concerned."

There are two issues here. Firstly, short sales are a fact of the present real estate environment. With Idaho one of the leaders in foreclosures nationwide, short sales are a way for home owners to potentially avoid this nasty experience (and "ding" on their credit report).

Secondly, it's about being a trustworthy, well-trained agent who is going to work towards a win-win situation every time.

In a perfect world there are no short sales and no bad agents. Since it's not, we work with what we've got...and we do it with excellence.

We'll write more on how we've been trained to handle short sales by a career loss mitigator and why that training means we are closing short sales every month.

Apprentice Winner and TV Host Joins Keller Williams

From the Keller Williams Press Release...

Kendra Todd, a nationally recognized author, lecturer and TV Personality, has joined Keller Williams Greater Seattle as the head of their Luxury Homes Division.

Todd, who won the popular NBC series The Apprentice, was the first woman and youngest contestant to ever win the hit reality show. During her tenure with the Trump Organization, she was involved with the sale of a $100 million Palm Beach Estate in Florida, the highest U.S. residential real estate transaction on record.

Currently, Todd hosts the critically acclaimed HGTV series, "My House is Worth What?" and serves as the Yahoo Finance real estate columnist with over 400 million registered users.

"We are thrilled to welcome the Kendra Todd Group to our firm" said Andrew Greenwell, Team Leader & CEO of Keller Williams Greater Seattle. "Her experience as an entrepreneur and insight into the luxury real estate market will prove to be a tremendous asset to our company," he said.

Happy Thanksgiving

Hard to believe Thanksgiving is upon us again.

Thank you to our Spokane clients and vendors and those we've met along the way.

No matter how tough things get, we know that we still abound in this country and we're grateful for everything we have. What a good time to remember that.

Have a wonderful holiday weekend and travel safely (falling gas prices--there's another thing to be thankful for!).

OPT OUT of those Annoying Credit Card Offers

If you would like to "opt-out" of receiving pre-approved credit card offers for 5 years you can call 1-888-5-OPTOUT (567-8688) or visit: www.optoutprescreen.com.

You do have to provide your name, address, birth date and Social Security number to process the request but the information stays confidential.

Here are three other websites that you can go to for removal of your name from direct mailing, "resident" and "occupant" mailings and coupon packs:

www.dmaconsumers.org/cgi/offmailing
www.advo.com/consumersupport.html
www.coxtarget.com/mailsuppression/s/DisplayMailSuppressionForm

Just Listed in Northwest Spokane

This attractive Northwest Spokane Rancher is move-in-ready.

Beautiful wood floors throughout most of main level. Fireplace in living room. Family room and large unfinished laundry area in the basement. Built-in storage space all around the home!

Priced at just $133,900 for three bedrooms, 1 bathroom and a wonderful basement, this is a areat find at this price!

Click here to learn more.

"Saving Energy on the Cheap"

From the Wall Street Journal Real Estate Section

The author writes that her "electricity consumption this year has dropped 687 kwh from the same period a year ago; in the past two months alone, I saved about $86."

Also contains the definition of "Low-e" windows!