Budget Deal Benefits California Short Sales!

While standing at the brink of the Fiscal Cliff, Congress struck a budget deal that includes a gem for California real estate. Namely, a one-year extension of the Mortgage Debt Relief Act of 2007. This will benefit distressed home sellers around the country, but it’s especially important to the health of our local real estate markets. Here’s why!

Without the Mortgage Debt Relief Act, the amount of forgiven mortgage debt in a short sale would be counted as taxable income by the IRS. Imagine having to sell your home due to a hardship, and then get a tax bill on the bank’s loss! It would be salt on the wound.

Many industry experts feared that if the Act expired, distressed home sellers would have no incentive to seek a short sale and would simply allow homes to foreclose. Any increase in as foreclosures would be unwelcome, as they are discounted on the market and drag down neighboring home values.

Short sales use fair market value in their transactions, and therefore preserve nearby home values. Short sales also keep the homeowner engaged in the process, preventing abandoned homes and blight. So, even if you aren’t a distressed homeowner, you should be cheering the extension of the Mortgage Debt Relief Act!

Even though California short sales were more numerous than foreclosures during 2012, we still had 102,000 foreclosures in the state from November 2011 to November 2012.  California completed more foreclosures in 2012 than any other state in the country. We have been able to achieve a measure of market recovery despite this number, thanks to the use of short sales and the overall improvement in our economy.

As your experienced Livermore real estate professional, I stay on top of the latest market news and statistics, and I’m happy to share this information with you. Meanwhile, if you’d like to find out the market value of your Livermore home, ask me for your free home evaluation!

Whether you are interested in selling your home in Livermore, Pleasanton or Dublin  or you just have a few questions, contact me! I will be glad to provide you with reliable, professional guidance!

John Kurtzer
Your Livermore Real Estate Expert
RE/MAX Accord

Livermore Real Estate
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