Questions: Bob please answer any or all of these questions - at your discretion? Selling your home for less than value-mortgage? Can house swapping make sense? There are three more - you pick?
- Allen P.
Answer: Allen, I have the intention, hopefully I answered the important questions, otherwise maybe in another column I can address those - thanks anyway?
Before trying to sell your home for less than the value of its mortgage, a so-called "short sale" that may be necessary if you owe more on your mortgage than your house is worth, you will need to convince the bank to forgive the mortgage balance after the sale. Banks will do this only if you can prove hardship -be prepared with recent W-2 forms and tax returns. If the bank agrees, your credit will suffer - although not as much as in a foreclosure - and you will have trouble getting another mortgage anytime soon. You may owe taxes on the unforgiving debt if you are selling an investment property or vacation home, but not if you are selling your primary residence. As always, ask your tax man or real estate attorney.
House swapping can be a way to make a move despite the "very weak" real estate market. Swapping homes, very popular for vacations, is now being used as a way to move permanently. Swappers usually must settle for a house that is less than their ideal in amenities or location - and you/they need to do a lot of research before making a decision. Typically the swappers use the same title company, get new mortgages and close simultaneously - and if one house is worth more than the other, the buyer puts up the difference. A number of Web sites have recently sprung up to help with the process, including onlinehousetrading.com, goswap.org and www.domuswap.com. Ads for home swaps are also accepted at Craigslist.org. Hopefully these (at this writing) addresses are still good!
Question: Bob, Although I am only 61, I had to take early retirement when my employer for the last 36 years downsized and eliminated my division. But I walked away with a handsome pension plus a bonus of six months salary and my retirement savings of almost $600,000. I'm thinking of investing perhaps $100,000 in real estate to increase my income. Do you think apartments are a good investment for cash flow. Hope you enjoy your Valentine's, if this is published during that period of time?
Answer: No. The primary reasons investors buy apartments are long-term appreciation in market value and depreciation tax benefits. Unless you are in the real estate business full-time, you won't be able to take full advantage of the depreciation tax loss benefits under the 1994 tax law improvements. Cash flow from most apartment buildings, except slums, is minimal.
Thanks D.J., I hope I have a sweetheart to convey a rose or to a few friend and enjoyed great company and great food. Thanks, to John and Pat for their hospitality!
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty, Inc.
4040 Del Prado Blvd., Cape Coral, FL