How To Negotiate - 7 Clever Home buying Negotiation Tactics

I am re-posting this from my website in the "Insider Tips" section.  I will include one tip in each blog entry  so that it is easier to digest.

TIP # 1

Get the "Dirt" on the Home Seller


Learn as much as you can about the motivations and situation of the home sellers.  For instance, if they're living in the house and they need flexibility around the closing date, you could offer to be flexible on closing if they move on terms.  In the case of estate properties, take some time to learn about the heirs - where they live, what kind of houses they live in and whether or not they are in legal or financial trouble. It may sound creepy, but most of this information is available for free online once you have the names of the home sellers.  You can also research obits and marriage documents that are in the public domain.  The more you know, the more leverage you have when it comes time to negotiate.

Visit my website at eSedonaHomes4sale.com.  It boasts one of the most comprehensive search engines available and has so many customizable features, you can see exactly what is on the market based on your "wish list".  At "Market Insider" you can also get a Market Analysis, Community Info, Local Schools information as well as Compare Areas.  Just input the zip code for the most current information. It is almost as good as having me siting next to you while you are researching Sedona real estate!  If you need to ask me a question just reach out and call me. My contact information is available on the website as well.

Massive Tax Bill Looming on Horizon For Homeowners Who Short-sell Their Homes

 The picture on the left shows a home that is upside down which is the term used for a qualified principal residence when the proceeds from selling the property will fall short of the balance of debt secured by liens against the property.  Besides ruining one’s credit, the debt that is forgiven is considered regular income and is taxed at the applicable rate.  I call this a “Ghost Tax”.  It is tax on your “income” that you do not have.  It is a paper income gain and the money does not exist to pay the tax.  You have to file a Form 1099-C, Cancelation of Debt with the IRS.  The most common situations where cancellation of debt is not taxable are discussed in detail in IRS Publication 4681. 

To help families who were upside down in their homes get out from under the debt and taxes owed, Congress enacted the Mortgage Forgiveness Debt Relief Act of 2007 (MFDR). The MFDR was enacted on December 20, 2007 (see news Release IR-2008-17).  Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principle residence.  The maximum amount you can treat as qualified principal indebtedness is $2 million or $1 million if married filing separately. 

Here is the kicker, the special relief is in effect from 2007 through 2012. So at the end of the year, this legislation expires unless Congress acts to extend it. 

The current administration is proposing an extension that would apply to any amounts forgiven before January 1, 2015. At that point the government would reassess the market conditions and determine whether an extension is appropriate. As with all financial information, please get with your financial planner, or accountant to see how the law affects you.