Tax Breaks for Short Sale Sellers Expire December 31, 2012

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One of the most unfortunate outcomes of the housing market crash was plummeting housing values followed by a series of events leading to a weak economy that further negatively impacted the real estate market. Those people hardest hit as a result have been mortgage holders of homes that are no longer worth at least as much as what is owed on them.

As time continued on and homeowners continued to struggle with keeping up on their mortgages, we started to see loan modifications and other drastic measures taken by banks and property owners to deal with these struggles.

Short sales became a household name as the benefits became more apparent; the government issued a tax break for those people suffering a tax loss as a result of forgiven debt. When a home that is worth less than what is owed on it and a bank agrees to accept the lesser amount, the difference is considered taxable income. Regardless of present day large-scale struggles suffered by countless Americans, they would have to pay income tax on the forgiven debt.

In 2007, however, the Mortgage Forgiveness Debt Relief Act addressed this concern by allowing cancelled or forgiven debt resulting from the sale of a primary residence to be exempt from taxation. The Act, however, is set to expire at the end of this year.

What does this mean for people considering selling their home as a short sale? It means that now is the time to start your short sale if you have been considering one. Because after December 31, 2012 any short sales that close will incur a good amount of income taxes on the forgiven debt. And that amount can add up quickly.

Now, even though short sales have come a long way and some are taking as little as 30 days to process, most of them are still processing for 45, 60, 90 days or even longer. If you are not sure whether there is enough time left to initiate a short sale, contact us today and we will review all the circumstances of your home and financial situation with you. There is still time to put in an application for a short sale but the end of the year is fast approaching.

July 2012 Market Update – Harford and Baltimore Counties

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Do you know how to detect a strong and solid real estate market? Look no further than our own back yard. In fact, aside from the slow but steady status of home prices and values, things are overall improving in our marketplace. And the good news is that it is a market that works in favor of buyers, sellers and investors alike.

Increase in the Number of Sales Transactions

Across the board we have experienced an increase in transactions, making it a very ideal time for sellers to list their homes. With fewer homes on the market and buyers beginning to pick up the pace in case the market does rebound sooner than later, the result is a higher probability of success for homeowners choosing to sell.

Fewer Homes on the Market
We are currently reporting about 20% fewer available homes on the market particularly good quality homes in desirable locations that are in great condition. Buyers realize the opportunity at hand and as they see inventory continue to dwindle they are actively seeking out good homes on our MLS. Another positive outcome of the lower inventory is an improved Days On Market average. While the entire year’s average DOM is about 125, the figures from the last 30 days are showing an average DOM of about 90 days.

Multiple Offers and Higher List to Sale Ratios

Homeowners that have chosen to list their homes are enjoying a higher list to sale ratio with most receiving multiple offers on their properties. This makes it the perfect time to be either a buyer or seller – because as a seller you know you have some leverage in negotiation and buyers can still walk away with a great deal. List to sale ratios are anywhere from 91 to 95% and in some cases we are even seeing 100%.

Continued Low Interest Rates

The great deals continue for buyers and investors with interest rates hovering at their record setting historic lows, making the market a phenomenal environment to be a first time buyer, move up homeowner or investor. Recently there have been mortgages offered and accepted at 3.25% for a 30-year fixed rate FHA loan.
If you are considering buying, now is a great time! With interest rates as low as they are – you will be getting the deal of a lifetime! Combine that with the low prices and relative ease with which you can go through a mortgage process compared to just a couple years ago, it could not be a better time to buy.

Conversely, sellers are also seeing some great results. Though some properties are more in demand than others, with the drop in inventory chances are you will generate a lot of interest and receive some good offers on your home.

To make our process even more efficient, we have developed a new program where we match buyers with properties before they even go on the market. Whether you are a buyer, seller or investor – we encourage you to contact us so we can match your needs with your goals and together achieve success! We look forward to hearing from you.