Shelli Dore’s Real Estate Blog

Archive for May 2010

Considering Short Sales
by Carla L. Davis

In today’s economic climate, many families are finding themselves in dire straights. The home that was once a blessing has now become a financial burden.

In an attempt to avoid foreclosure, which can reap havoc on one’s credit for years to come, homeowners are searching out details on short sales.

In simple terms, a foreclosure is when, after defaulting on payments (typically after 3 months), an estate becomes the absolute property of the lender. And what’s more, in some cases you, the homeowner, may also be responsible for “deficiency judgments.” These mean if the sale of the foreclosed property doesn’t satisfy the amount of the loan, you may be obligated to pay the difference.

On the other hand, a short sale, according to MSN Money, is “the sale of a house for less than what the owner still owes on the mortgage. If the lender agrees to a short sale, the rest of the homeowner’s debt typically is forgiven. Lenders sometimes agree to the procedure in order to take a small loss and avoid the lengthy and costly foreclosure process.”

There are more reasons to avoid foreclosure than just your credit rating. A recent report from NeighborWorks America ® notes that other factors come into play in neighborhoods affected by foreclosures. These issues include such things as lowered property values, increased incidence of financial scams, youth stress and instability, and increased crime rates. The report notes, “Abandoned homes from the foreclosure crisis have a direct effect on the rise in crime in communities.” And according to another study by Dan Immergluck of the Georgia Institute of Technology in Atlanta and Geoff Smith of the Woodstock Institute in Chicago, “When the foreclosure rate increases one percentage point, neighborhood violent crime rises 2.33 percent.”

There are some prudent steps to take when considering a short sale.

First, learn about loan modifications. Honesty is the best policy when it comes to lenders. Pick up the phone and call your lender, explain your situation, and see what your options may be that could allow you to stay in your home. The processes of foreclosure and short sale can be costly to lenders, and they may be willing to work out a payment schedule that will get you through this trying time.

Second, consult with the experts. According to the National Association of Realtors, by using a qualified team of short sale professionals, along with a real estate attorney, you can ensure that you aren’t taken advantage of during the short sale process. This team can help:


  • Provide you with a comparative market analysis (CMA) or broker price opinion (BPO).  
  • Help you set an appropriate listing price for your home, market the home, and get it sold.  
  • Put special language in the MLS that indicates your home is a short sale and that lender approval is needed (all MLSs permit, and some now require, that the short-sale status be disclosed to potential buyers).
  • Ease the process of working with your lender or lenders.  
  • Negotiate the contract with the buyers.

Next, prepare for a long selling process. Waiting for your lender’s approval of your short-sale package can take several weeks to months.

Finally, a short sale is not the end all solution to your problems. Though there have been recent allowances made by the government under the Mortgage Forgiveness Debt Relief Act and the Debt Cancellation Act, debt forgiven by your lender may be considered income that taxes will have to paid upon.

If you are having issues making your mortgage payments, call me to discuss your options regarding debt programs and short sales.

Published: May 10, 2010

First-Time Home Buyer Tax Credit Extended For Armed Service Members
by Carla L. Davis

The expiration date of the $8,000 first-time home buyer may have already passed for most, but there are some potential homebuyers who can still take advantage of this great opportunity.

For those who are qualified service members, you have an extra year to cash in on the credit. Your new deadline is April 30, 2011. The government defines “qualified service member” as a member of the uniformed services of the U.S military, a member of the Foreign Service of the U.S., or an employee of the intelligence community.”

The reasoning behind this extension is simple. National Association of Home Builders Chairman, Bob Jones, says, “Congress recognized that many service members may have missed out on the home buyer tax credit due to being posted overseas. It is only fitting that they be given another year to take advantage of this opportunity in appreciation of the sacrifices they have made serving our country.”

There has been another modification to the credit for members of the armed service. Currently, a buyer must repay the credit if they move out of their new home within three years. This particular contingency has been waived if the move is due to government ordered extended duty service.

Buyers must meet the other qualification for the credit, however, including the income limits. These limits are set at $125,000 for single taxpayers and $225,000 for married taxpayers filing joint returns.

You must be a first-time home buyer, which is defined as “a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse.”

If you don’t fit under this definition, then be sure to check into the $6,500 repeat buyer tax credit.

To get the first-time home buyers credit, you will need to claim it on your federal income tax return. There is a specific form (IRS Form 5405) that helps you determine how much the credit will be. Be sure to talk to your tax professional about the credit to ensure it is submitted correctly.

For those interested in the credit, you can visit to find out more information.

Published: May 4, 2010


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