Short Selling a Las Vegas Home - The Most Common Questions Asked

Posted by Paul Francis on Sunday, February 3rd, 2013 at 1:31pm.

Short Selling a Las Vegas Home

Short Sale your Las Vegas Home with a Highly experienced Las Vegas Short Sale AgentWow... a completely busy week with Las Vegas real estate investors calling me with questions about short selling their Las Vegas Homes. I must have had at least 20 phone calls from people completely confused with all of the information that is out there including one Las Vegas real estate investor from California who has multiple "investment" homes in Las Vegas that has gotten a lot of very bad information.

Due to Nevada AB 284 putting the foreclosure process in Nevada to a screeching halt and thousands of homeowners that are essentially living rent free in their homes, a side effect of this is that there are now more homes for lease in Las Vegas then homes for sale. A very rare occurence due to all of the investors that have snapped everything up and put the homes back up for lease creating a glut of rental homes in Las Vegas. Basic Economics 101: Supply vs. Demand = Price. Due to the huge supply and lack of demand, rental prices are dropping like a rock in Las Vegas and for those real estate "investors" out there that bought during the real estate bubble and have been barely holding on, they are now losing even more money with the reductions in rent that they can now receive. For those that have been coming out of pocket every month to cover the mortgage after rental income, it's even worse for them now and there is pretty much no reason to keep a home that is $150.000+ underwater AND come out of pocket $500+ a month. That's certainly not an "investment"... it's a liability.

Regardless... Here are the top questions asked this week about short selling a Las Vegas Home.

Do I need an Attorney to have the Deficiency Judgement Rights Waived?

NO. Having an Attorney to review and consult with you is great for peace of mind but YOU DO NOT have to pay an Attorney to have the future deficiency judgement rights waived and in writing. YES... there are some Attorneys out there running scare ads making it sound like if you don't use (pay) them to short sale your home, then you'll end up being sued down the road. There are numerous Attorneys in Las Vegas that will review / consult with you for FREE and let the real estate agents do the work. Any truly experienced Las Vegas short sale agent KNOWS what to do in getting the future deficiency judgement rights waived and in writing. If you talk to a Las Vegas real estate agent that can't explain the recourse laws when it comes to foreclosure or short selling a Las Vegas Home... Don't walk... RUN away from them. If they can't explain something so simple, there are probably many other things they don't know either. Not one of my clients that I have short sold their home has had a deficiency judgement lawsuit filed on them and I've been doing short sales for over five years saving people millions of dollars.

I certainly welcome my clients consulting with their Attorney but DO NOT think for one moment you HAVE TO pay an Attorney to handle your short sale to have the Deficiency Judgement Rights Waived and in Writing.

If I Just let my Las Vegas Home go to Foreclosure, can the lenders come after me?

Judicial Foreclosure in Nevada is not PrettyIf you signed your Nevada home loan documents before October 1st, 2009 and you just let the home go to foreclosure, the lender on the first loan has six months from the date the foreclosure sale takes place to come after you for the deficiency balance and the second loan (if you have one) has six years to file a deficiency judgement lawsuit. This is why it's so important to have the future deficiency judgement rights waived and in writing from your lender. Nevada is traditionally a Non-Judicial State when it comes to foreclosure but Lenders CAN and have filed Judicial Foreclosures in Nevada. Just because the vast majority of lenders pursue foreclosure via the Non Judicial process in Nevada does not mean that lenders do not have the right to file a judicial foreclosure and go after all kinds of everything. Attorney Fees, Lockout Fees, Repossession fees, etc, etc.

Don't be surprised hearing more about Judicial Foreclosures taking place due to AB 284 making the non-judicial foreclosure process very difficult for lenders.

As for signing loan documents after October 1st, 2009, it's really not even worth mentioning / discussing. There are better solutions then short selling that you can just call me about.

Tax Consequences for Short Selling

If it's your primary home, then you don't have too much to fear unless you did a cash out refinance and blew the money on some exotic vacations, paid off credit cards or bought a new Ferrari. The Morgage Forgiveness Default Act was extended once again through 12/31/2013. You can go straight to the IRS's website for information / details here. (Ironically, the same Attorneys blasting the advertisements that you need them to short sale your home are the same ones that were advertising that you needed to act fast last year before the Mortgage Forgiveness Default expired. Highly experienced Real Estate Agents with a clue pretty much knew that it would be extended.) For Las Vegas Real Investors... I've done several Las Vegas short sales where their tax attorneys took care of everything due to ALL of the losses they incurred. This is something that you need to figure out BEFORE you contract with an experienced Las Vegas short sales agent so you don't waste everybody's time. Everybody's situation / income is different. I'm not a Tax Professional and any real estate agent that pretends they are is probably a real estate agent you want to stay away from.

Either way though.... whether you short sale or you let the home go to foreclosure, you are going to get 1099'd by the lender. It does not matter either way. I had one investor state that they "saw" somewhere on the internet (must be true if it's on the interent.. Lol) that this could be negotiated away as part of the short sale. I highly doubt that since the lenders have to follow IRS guidelines when it comes to this. They (or the investors that actually own the loan) are reporting a loss on their books for their taxes so I find it HIGHLY IMPROBABLE of this even being possible and I've certainly never seen it.

Once Again... Consult with a Tax Attorney BEFORE short selling if the Las Vegas home you want to short sale is an "Investment" property. My experience, but Joe the Plumber that does taxes a couple of months out of the year is not going to have a clue on how to write off all of the expenses incurred for owning a liability and that's essentially what you have. Negative Cash Flow, completely underwater in the value is a Liability and NOT an investment.

Do I Need to Pay the Homeowner Association Dues?

YES, YES, YES. This is one of my biggest pet peeves.... especially for the Las Vegas Real Estate "Investors" that are leasing out their Las Vegas home and NOT paying the HOA dues with the rent they are collecting. Nevada is a Super Lien state when it comes to HOA's and if you don't pay them, the Homeowners Association has every right to send your delinquent HOA liens to auction where somebody can buy them and then OWN the Title to the home. This is actually starting to become quite common. Once it goes to auction and somebody buys it... You NO longer own the home and you can't sign ANY paperwork transferring title EVEN if the short sale gets approved.

When it comes to the lenders and the mess that was created from handing out multiple loans to anybody that could sign their name, I completely understand how real estate prices were driven up burying people in debt. However, if you bought in a community with Homeowner Association Dues due to the Las Vegas home being in a community with parks, gated, guard gated, etc... you have a responsibility to OTHER people that have invested in that community and not the banks. NOT paying your HOA dues when you can afford to is irresponsible and harms other members in the community.

MOST of the short sale deals that I have been involved in that blew apart have been due to the Homeowner NOT paying their Association Dues and the fines / penalties getting racked up. I was even involved with a short sale where I was representing the buyer and the seller LOST their home due to not paying their HOA dues which resulted in a COMPLETE waste of time for everybody involved.

Pay your HOA dues if possible.

Listing a Las Vegas Short Sale Below Market Value

Find out what your Las Vegas Home Value is by clicking hereThis was a common tactic when there was a glut of inventory and a tactic currently found in many cities today. However, Las Vegas currently has a SHORTAGE of inventory available for sale right now so listing a home below market value is a COMPLETE waste of time. Especially if the entity that actually owns the loan is Fannie Mae or Freddie Mac. They know what is going on with the Las Vegas Real Estate market and want TOP Dollar.

You need to use a top notch Las Vegas real estate company such as Prudential Real Estate that has all of the tools to get your listing exposed to the most qualified buyers. Three years ago I had to list short sales a little below market value to attract buyers with the glut of inventory of more desirable homes to purchase. Today, that has COMPLETELY changed and in order to have the highest success in obtaining a short sale approval, you need TOP NOTCH real estate marketing to get the highest price possible.

The California "Investor" that contacted me this past week complaining about their real estate agent not doing anything for them and not getting the short sale done had their property listed for about $40,000 below today's current market value. Quite obvious why it was going nowhere once I looked up the values.

I've been marketing Las Vegas Homes for sale since 1997 and my degree is based in a very highly intensive Supply Vs. Demand = Price based industry. Listing Las Vegas Homes far below market value with the current Las Vegas market conditions is as asinine as The Wynn offering rooms for $19.99 a night.

Do I Need to Move Out of my Las Vegas Home if I stop making the Mortgage Payments?

NO, NO, NO. There is no reason for you to move out and vacate the home if you decide to short sale. None, Nada. It's actually preferred that you stay in the home to keep it maintained. Save up your money during the short sale approval process and pay your HOA dues if you have them. Stories of somebody knocking on your door to kick you out and throw everything out has NEVER happened to one of my clients and NEVER will. I'm very in tune with the foreclosure process laws in Nevada and if they are violated, I certainly have the resources and contacts so that you are covered. If you are my client and are harrassed in any way during the short sale process, I will certainly make sure that it does not happen again.

Can I buy another Home right after the Short Sale?

YES.. with conditions. I've short sold homes for clients that had a job relocation or other qualified hardship that qualifed primarily because their mortgages were current.... and purchased another home right after the closing of their Las Vegas short sale. There are numerous guidelines to follow here but it is certainly possible.

Can You Do a Loan Modification for Me?

NO. Doing loan modifications is not the business I am in. There have been times during the short sale process that the homeowner was offered a very good loan modification that I encouraged them to take and cancelled out the short sale. I HIGHLY encourage Las Vegas Homeowners to pursue a loan modification if they want to keep their Las Vegas home BEFORE listing the home. Be warned that there are several loan modification programs out there that are all smoke and mirrors such as offering a lower monthly payment but the difference is tacked on to the loan balance. Basically, all that is being accomplished is that you are going to owe EVEN more for a home worth tens of thousands below market value and may take over a decade to see the value reach what you owe on it. I have absolutely NO problem reviewing these modifications or referring you to a third party that has no interest.

Here is a list of Licensed Loan Modification companies in Nevada.

Real Estate Agents offering this service are NOT allowed to be paid for this service unless they are licensed to do so. In other words, they are more interested in just getting your business to short sale your home.

That About Covers it for this Post

Thank you for reading and if you have any questions not covered here, PLEASE comment below so that I can answer them. If you have questions not covered here, chances are that somebody else out there has the same questions that needs help.

If your questions were answered and you are ready to start a new beginning of moving forward in life, jump right over to my Las Vegas Short Sale page and fill out the information about your Las Vegas area home at the bottom of the page or simply call 702.592.3058.

With over five years of actual hands on Las Vegas short sale experience and saving Las Vegas homeowners millions of dollars, I can certainly help you. The sooner you get it over with.... the sooner you can move forward in life.

Paul Francis, Realtor®
Prudential Real Estate Las Vegas
Las Vegas Short Sales
702.592.3058

 

 

 

 

 

 

 


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