Why Short Sales Make Sense Even if You Have to File a Bankruptcy

Many bankruptcy attorneys are telling their clients to not do short sales. This may make sense from the attorney's point-of-view, but there are reasons why you might want to consider a short-sale even if you have decided to file bankruptcy:

BUT if you factor in the long term goals of most people, like owning a home, it makes sense to do everything you can to ensure you have a clean credit file. Short sales look better on your credit in the long run, but sometimes people just cant deal with more stress, thats just how it is and they will simply deal with the resulting consequences later when they are in a better state of mind.

It should be noted here, because I'm sure some guy that's been doing short sales, or mortgages or selling Hyundai's for a tenth of the time I have...(I've never sold Hyundai's, just the other stuff) will make some comment about how despite my opinions short sales are still a negative item on your credit.

He would be correct, its just like settling a credit card for less than you owe, it will most likely report on your credit that you did not fully pay the debt. Sometimes we are successful at getting the lender to report it as paid in full, but you shouldn't rely on that as any kind of a certainty...if it happens its a nice bonus, but don't plan on it. So it is BAD, but it IS NOT as bad as a foreclosure nor is it as bad for as long as a foreclosure.

By law, foreclosure stays on your credit for 7 years. Bankruptcy also remains 7 to 10 years depending on what chapter you file under. The major CRA's or Credit Reporting Agencies such as Trans-union, Experian and Equifax do not release to the public how they calculate credit scores, however there are ways out there to simulate how events like bankruptcy and foreclosure factor in to your score, and typically a settled account such as a short sale or a credit card settlement, will affect your credit score negatively for 12 months. After that first year these simulators suggest that the negative impact begins to greatly diminish.

Read more...

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If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.

DON'T OVERPAY... FILE A PROPERTY TAX APPEAL

Property taxes seem to jump up year after year. Unfortunately, we've become so accustomed to rising taxes that it's no longer a surprise. But here's something that may surprise you. Did you know that over the last eight years, property taxes have actually outpaced even inflation? Those rising taxes - combined with the recent plateau in home values in some areas - mean you may be paying more than your fair share.

In fact, the National Taxpayers Union estimated that as many as 60% of home values were assessed too high, resulting in an incorrectly larger property tax bill.

Based on recent market activity and the rising property taxes across the country, there's a chance you may be in the group of people paying too much. In fact, homeowners in declining markets are receiving solicitations from companies that charge up to $250 to help lower property taxes. But with the steps below, you can work with your local County Assessor to lower property taxes for free...and save yourself the $250!

The good news: it's easy.

First, contact your local tax assessor's office and ask for someone in the reassessment area. Find out when appeals are heard, and how the process for submitting a property tax appeal works.
Additionally, ask for a copy of your property card. Review the card and confirm that the basic information about your property is correct. For example, is the square footage and number of rooms for your home accurate? If the number is incorrect, the county may change the assessment without a formal appeal. If everything on the property card is correct but the assessed value still seems too high, your next step is to gather the following documentation to support an appeal. And don't be surprised if the assessed value is lower than what you think the market value for your home is--many counties use a formula which uses a percentage of market value to determine assessed value. Ask what the formula is... because an assessment that is less than market value still might be too high.

If you have a current appraisal that supports the value being lower using recent market-value information, many counties will accept a copy of the appraisal with the appeal. If the appraisal is outdated, you can order a new one--just call me for a referral to a great appraiser. You can also visit the local assessor's office or search online, and look through the public records for other homes that have similar features to yours, but have lower assessments. They will be able to give you current market information for your neighborhood, and help you see how your market value and assessed value stacks up against your neighbors.

Submitting an appeal is generally a fairly simple process, but make sure to take the time to fill out all forms in advance and be prepared with your documentation if there is an in-person hearing that needs to take place.

More good news...

According to the National Taxpayers Union, about 33% of property tax appeals succeed! Taking the time to review the accuracy of a tax bill could easily save you hundreds of dollars per year, adding up to thousands of dollars during the time you own your home.

Thanks to Paula Clark for this valuable information

NAHB Testifies before US House Committee

United States House Small Business Committee Subcommittee on Finance and Tax Hearing On
“The Effect of the Credit Crunch on Small Business Access to Capital”

Scott Eckstein testified yesterday (April 30, 2008), on behalf of the National Association of Home Builders, before a U.S. House of Representatives committee looking at the current credit situation and its effect on the smaller home builders across the country.

Their recommendations to the committee have implications for all real estate investors. Here are some highlights:

Broader Sources of AD&C Credit (acquisition, development and construction)

The current financing quagmire for home builders vividly illustrates the importance of developing additional sources of AD&C credit. ... A viable secondary market for AD&C loans would directly benefit builders and lenders by: (1) transferring risk away from lenders; (2) increasing availability of funds so that projects can be
more reliably completed; and (3) mitigating the devastating impact of equity calls on builders, or transfers of partially completed projects to banks under capital and/or regulatory pressure.

Balanced Regulation

The approach of the regulators in overseeing institutions involved in AD&C lending will be an important factor determining the length and severity of the current housing and economic recession as well as the vigor of the subsequent recovery. It is crucial for the banking regulators to take a balanced approach when evaluating bank lending, especially in regard to AD&C loans. The regulators should continue to encourage institutions to pursue sound loans on viable projects. In addition, the regulators should provide additional guidance to lenders on dealing with outstanding
AD&C loans to ensure that losses are minimized through flexible and prudent loan accommodations. Such actions are just as critical in a nascent recovery as in the current downswing.


Federal Home Loan Bank Guarantees of Municipal Bonds

S. 1963, introduced in the Senate by Senators Rockefeller, Crapo, Stabenow and Carper, would address this impediment. The bill would amend Section 149(b) of the Internal Revenue Code by adding FHLBanks to the list of government agencies and government-sponsored enterprises (GSEs) authorized to provide credit enhancement for tax-exempt municipal bonds. Fannie Mae, Freddie Mac, Ginnie Mae, the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) have been permitted since 1984 to provide such credit support. A similar provision was included in the Housing Assistance Tax Act of 2008 (H.R. 5720) that was recently approved by the House Ways and Means Committee. Enactment of this measure would help to significantly lower financing costs on public infrastructure and other projects that are the foundation for meeting community housing and economic development needs.


Home Buyer Tax Credit

Two causal factors in the current housing downturn and the related credit crunch are
declining house prices and excess inventory. These elements are equally central to the outlook for the broader economy and the financial markets. Policies that stimulate home purchases in the immediate future can pay huge dividends. The biggest bang for the buck most likely would be provided by a temporary homebuyer tax credit, such as the credits approved recently by the Senate in the Foreclosure Prevention Act of 2008 and by the House Ways and Means Committee in the Housing Assistance Tax Act of 2008. Indeed, the recent revival of interest among prospective buyers suggests that temporary credits could stimulate a wave of home buying that could quickly reduce excess supply in housing markets and halt the dangerous erosion of house prices and mortgage credit quality. NAHB applauds the Congress for its efforts to create a homebuyer tax credit, and stand ready to work with Congress in crafting the most effective credit to help solve the current economic crisis.

Expand the Net Operating Loss Deduction Carryback

Home builders, like many businesses, are now reporting financial losses when a few years ago they were generating jobs, providing local development and paying taxes. For home builders large and small the importance of the ability to claim and carry back net operating losses (NOL) deductions to years when significant taxes were paid cannot be overstated. The inability to do so will result in the need to either increase high-cost borrowing or further liquidate land and homes, which
will only compound the existing inventory problem.

Expand the Mortgage Revenue Bond Program

The existing Mortgage Revenue Bond (MRB) program also offers a method of increasing
housing demand. A special allocation of bonds to be used for either purchase or refinancing would be beneficial for housing.

Expand Small Business Expensing

Section 179 of the tax code allows small business to expense the cost of investment for business property. The Economic Stimulus Act of 2008 temporarily expanded the rules so that small businesses may expense up to $250,000 of qualified investment for tax year 2008 ($128,000 would have otherwise applied in 2008, with that amount indexed for inflation through 2011). The expensing benefit is phased-out for business incurring more than $800,000 in qualified investments in 2008 ($510,000 would have otherwise applied in 2008, with that amount indexed for inflation
through 2011).

Click Here if you want more information on this committee and its work.

FIRST SEMINAR A SUCCESS!

Our thanks to the participants who came our first seminar, Where Should I Invest in 2008? held last Saturday at Windermere. We had a great turn out and a great discussion.

A special thanks to tax attorney, Jim Sexton, who reviewed the tax benefits of rental investments with a special eye for the current market.

Also, a special thanks to Eric Torres whose impromptu information on securing financing for rentals which greatly enhanced our discussion.

Look for more seminars soon. If you'd like to be notified of future seminars, please email us at Dulcie@DulcieCrawford.com and we'd be happy to put you on our mailing list. OR stay tuned for announcements right here!

Where Should I Invest in 2008?

SEATS ARE GOING FAST! BE SURE TO RSVP BY THURSDAY, APRIL 17TH!*

THE DULCIE CRAWFORD GROUP PRESENTS

Where Should I Invest in 2008?
Tax Advantages of Real Estate Investments
in Today's New Market

Speakers:
James Sexton, Tax Attorney
Esquire Group

Dulcie Crawford, Realtor®
Windermere Prestige Properties

Saturday, April 19, 2008
10AM to Noon

2200 Paseo Verde Parkway
Suite 160
Main Conference Room
Henderson, NV 89052

Limited Seating
RSVP 702-432-4600, Pattie Thomas, Marketing Coordinator
OR
Email: Dulcie@DulcieCrawford.com
BY Thursday, April 17

"Las Vegas, Nevada: Yes, Las Vegas has been hit hard by incoming investors, who watched their home values disappear and then left those homes empty. Las Vegas comes in quite high on the national foreclosure list, almost always within the top three metro areas. But there's an upside--a very strong job market. In 2007, Las Vegas experienced a 12 percent increase in population, partly driven by retirees looking for Sunbelt states to move to. Coupled with low prices, we could see inventories reduced here, which would also stabilize prices. Be careful what you buy, but I like it." -- Best and Worst Places to Buy a House by Danielle Babb, Entrepreneur.com, January 23, 2008.

Mortgage Forgiveness Debt Relief Act 2007

In December, Congress pass the Mortgage Forgiveness Debt Relief Act to provide some relief through loosening the tax laws and empowering FHA to help with refinancing. This will help a number of homeowners who are in trouble. Here are three sources that explain the law and its implications for homeowners:

Library of Congress Summary

IRS Summary

Article from Las Vegas Review Journal

If you want more information on Short Sales & Bank-Owned Properties, visit Understanding Foreclosures Las Vegas.