We will likely see an onslaught of short sales within the next six months due to the tax break expiring soon. The Act that first showed in 2007 may disappear by the end of this year. This will cause a rush on selling homes through short sale to avoid possible foreclosures. A short sale is a sale where the price received is a lot less, by as much as 50% of the amount owed to the mortgage company. Many find they are in trouble with their mortgage payments when their cash flow slows down or they lose part of all of their income.
People choose the short sale if the bank agrees to get out from under the hefty mortgage payments they can no longer make. Short sales save homeowners from foreclosures, which are hard on all parties involved. Right now, the 2007 Mortgage Forgiveness Debt Relief Act allows short sales to occur without the burden of paying taxes on the amount they were “forgiven.” Once the Act is gone, sellers will owe taxes on the difference treating it as a gift in which they had to pay taxes. The Act might extend for another year or two.
Short sales are a good way to get a home for less. RealtyStore.com is one of the best resources online for finding such deals.