Your Questions About Foreclosures | foreclosureorder.com

Your Questions About Foreclosures

Your Questions About Foreclosures

Betty asks…

What can I do about a low home sale price in my neighborhood affecting my appraisal?

A house within a block of me needing updates and repairs (foreclosure that sat vacant for some time) recently sold about 20,000 below what two other homes in the area are listed for. Because it is in the same subdivision, it is causing my value to drop about 20,000 below appraisal from three years ago. People don’t move frequently from my neighborhood (stable, family neighborhood close to services and highways), and the two in top-notch condition currently on the market haven’t sold yet. The most recent sale is almost a year ago. I’d like to refinance before my ARM goes up, but I can’t get a decent loan to value ratio with the low recent sale.

Your Questions About Foreclosures

The Expert answers:

It is nice to think that your house is worth more than the market is saying. Reality is that very few houses are worth what they were three years ago. You can try to sell it for that and hope that someone is stupid enough to pay that, but even if they were it would appraise for that today and they wouldn’t be able to get a loan for that amount.
The best thing that you can do is to get a new appraisal for your house. You are going to need it anyways, why not do it now. Face it, we are in a buyers market.pp

Your Questions About Foreclosures

Paul asks…

How long do I have to reinvest capital gains from the sale of my primary residence?

OK, if that sounds easy, let’s see how many variables I can throw in.

I bought a Fannie Mae foreclosure house last September and undertook a host of extensive renovations myself. I couldn’t finance the house and renovations through a mortgage, so my parents co-signed a line of credit that needs to be rolled into a mortgage before this September.

After spending seven months subletting an apartment during construction, I moved in to my house. I attached utility bills and building permits to my ’08 tax return to document that, for purposes of the first-time homebuyer credit, my project should be considered a site-built house with the applicable date for the credit being the day I moved in–I got the $8K grant as if I’d made a 2009 purchase (have to repay if it’s not my permanent residence for three years).

I’ll be deploying to Iraq later this summer and am rushing to convert my loan into a mortgage before I leave town for pre-deployment training. But the refinance is going to cost me over $7000!!! I’m not happy about repaying all the fees I paid during my cash sale closing last year and am considering selling vice the refi. I plan to put the house on the market at a price to net me $15K after sales fees and construction expenses; for various reasons I’ll refinance if I can’t clear that amount.

It is my understanding that if I sell, I would owe the IRS $8000 and roughly 25% of any capital gains (under my reading I don’t qualify for home sales capital gains exemptions). However, I would put any money I save overseas and proceeds from this house into another fix-up foreclosure home when I return next summer.

a) how can I minimize my tax liability and maximize my funds towards a new residence?
b) if I can avoid cap gains tax and the credit pay-back by reinvesting in a new primary residence, how long do I have to reinvest? Will I be able to convince the feds that time spent for military service in a combat zone should be tacked on to that clock?
c) I did most of the work, from demo’ing a pool in the backyard, replacing wood paneling with sheetrock, installing hardwood floors, relocating kitchen, etc. with my labor and the help of great friends. If I had bids for some of the projects I undertook, can I expense my labor to reduce capital gains? The profits aren’t coming through speculation (not that I philosophically object to that), but through nine months of my blood and sweat. It doesn’t seem right that I could deduct paying someone to texture my walls but get hit if I buy the sprayer and do it myself.
d) should I be doing anything during the sale or refi to make something else in the process easier?

Thanks for reading my novel, and I really appreciate any tips!
Thanks for the advice. I’m asking here for ideas, previous experiences and hopefully some sources (I’ve checked IRS pubs but they, of course, don’t expand on all the variables here). I’ll be verifying whatever counsel I receive but can imagine some valuable feedback from this community.

Your Questions About Foreclosures

The Expert answers:

You are behind the times. You will pay full CGT, it does not matter that you reinvest. You are thinking about laws that are like 10 years old.

From what you state you need to refund the 8k and will owe about 2,400 is capital gains tax.

And no, you can not deduct for your own labor in your house.

Personally I think you are damn lucky to be ahead in this market, that is a really short investment, and you are 12,600 ahead. Most people would be in the red reselling in a couple of months like this.

Have a pro do your taxes, you will have red audit flags popping up left and right.

Your Questions About Foreclosures

Linda asks…

foreclosures homes companies wha’ts the real deal?

hi everyone,
since the market is down maybe a lot of things have changed. so i found out about 2 companies that have foreclosures home for sale. they are www.bargainnetwork. i found them on craiglist.com. when i called they told me that my mortgage will be based on what is owed on the house, even with bad credit, and there wont be any down payment. it seems too good to be true. and there’s refundable fee in case you don’t find a house that you like. so how do i find out if they legit or not? does any of you had any experience with any of these companies? i don’t know how the foreclosure thing work. can you guys tell me more about it. i’m new to that web. unfortunately there’s not an easy way to thank each you. so thanks in advance
i’m located in florida

Your Questions About Foreclosures

The Expert answers:

Looking at your question, you state that these sites have forclosure homes for sale. They really just list them, not own them. In most cases, they are owned by the bank and these companies make money by identifying which houses are bank or government owned, and making you pay to find out the details of the listing. You can take them out of the loop and help yourself out directly. Use a listing such as the one from http://www.bargain.com/homes/ that you listed, or http://foreclosure.com that I listed and they will identify the forclosed homes. To get the information that they won’t show you for free, you need a free real estate search engine such as http://www.remax.com/. At the free site, put in the price range that you found at the bargain or forclosure site and you will get the detailed information that you are looking for.

If you see a house that you like, what you have to pay to get it is based upon what the lender will accept. If you are a poor credit risk, they will not likely lend you money to purchase it because they probably ended up getting it back by lending to a poor credit risk. They way that you can find out is to get yourself a buyers representative real estate agent and get pre-qualified from a lender for the amount of money that you are looking to borrow. That way, when you find the house that you want, all you need to do is have your buyer representative approach your seller representative with a reasonable offer, backed up by a prequalification letter (known as a pre-qual) and you will at least know whether or not the seller will accept your terms.

Good luck, it really is as easy as it seems! (at least to me)

Your Questions About Foreclosures

Sandra asks…

How do I buy foreclosed home/short sale/bank owned.?

I am having a really hard time buying a house. After a few weeks of trying by myself to buy a home. I have come to realize that I REALLY need an agent. I have a month to buy a home and have come across the “short sale” which can take up to 3 months. I have been approved for 200k. I want a townhouse and it seems like all the homes I can afford are way out of town. At the same time I see hundreds of homes in short sale and foreclosures. Here are my questions hopefully you can help me out.

1) If I make an offer 5k-10k higher than asking price on short sale, will the accept faster or will it still take the same amount of time?
2) If I go with bank owned/REO should I have a realtor and also what is the wait time on the approval.
3) What is the best way in going about buying a home in foreclosure/bank owned/short sale?

Your Questions About Foreclosures

The Expert answers:

Nothing you can do will speed up a short sale. A very aggressive agent can speed it up, but you do not have time to find an aggressive one with time to deal with you. The good agents are very very busy these days.

Stick with REO and use an agent. The banks are not that concerned with you go over asking price, but want strong offers. Ie, the larger your down payment the better.

REO’s close in a week with cash, and the standard 14-30 days if you finance. It pretty much depends on the bank you finance with.

Your Questions About Foreclosures

Nancy asks…

How many people have put their “prime” homes up for sale and have received “0”offers?

My neighbors homes are in stable area:Schools are award winners.The police & fire protection rated highest in our midwestern State: Close to outstanding shopping, medical, and transportation. Everyone wants to live here!
So I thought.
These homes are the newest and best, 3-5 years old, and are bargain priced in the 300-500,000. range. Many are telling me that they got into the homes with little down, and flexible/fixed loans which had premiums go up hundreds as the taxes, insurance, and other “adjustments” to numerous to mention went well above their earning powers, so they are wanting out.
Some are selling off other assets to keep up, others are using credit cards to make ends meet.
Real estate agents tell them the market is slow. Some lower the asking price below what they had to pay for them.
Still no interested buyers.
Foreclosure simply means an empty home bought by a foreign subsidiary.The morgage holder makes $$ but shows a loss, legally!
What’s next?

Your Questions About Foreclosures

The Expert answers:

Could be a slow market in your area. What are employment conditions like?

Maybe the house you’re talking about is priced too high.

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Your Questions About Foreclosures
Your Questions About Foreclosures
Your Questions About Foreclosures
Your Questions About Foreclosures
Your Questions About Foreclosures

Your Questions About Foreclosures

Your Questions About Foreclosures