Buyers · Law/Regulations · Real Estate

Is There Capital Gains if Selling Your Home Short Sale?

I recently overheard a couple that were selling their home mention they were giving their house away at a very low price because they didn’t want to have to pay capital gains tax if they were foreclosed on by their mortgage company.

These particular people were not my customers, so it is not right for me to engage in conversation with them. I didn’t know their entire story, including the condition their home, nor it’s location.  That didn’t stop me from wondering why they thought they had to “give their home away.”

You see, the Mortgage Debt Relief Act of 2007 excludes this capital gains loss from 2007 – 2012 on the short sale of a primary residence. Now Realtors are not required to be experts in all things.  They aren’t CPA’s, nor do they work for the IRS; however, this particular information has been big news for the real estate market. A knowledgeable Realtor can inform their customers of valuable information like this.  http://www.irs.gov/individuals/article/0,,id=179414,00.html

Sellers should be informed of the facts before they price their home for sale. Generally, most Realtors provide sellers with a FREE Comparative Market Analysis (CMA) when meeting with potential sellers. During the CMA presentation, information is exchanged between the Realtor and the seller so both can make a decision.

Both make a decision? Why both? Because the seller and the Realtor need to determine if they can work together.

Pricing a house right can be the difference between selling and not selling. If a house is overpriced, it may age on the market. The longer it’s on the market, the more likely buyers will think something is wrong with the house because no one has bought it.

I strongly recommend a seller get more than one Realtor’s opinion before listing their house for sale. Know that a CMA is an “opinion” and that the seller has the final say on the asking price of their home. Sellers need to be aware that pricing their home should be based on what a buyer would be willing to pay, not what they think their house is worth.

If you are thinking about selling your home in the Clark County real estate market, I’d like the opportunity to provide you with a free CMA.

Preferably, I’d like to be the last Realtor you meet with!

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