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Spoke with a realtor and my house is basically going to sell for almost 100k less than I paid five years ago, as is. She did advise me however, that if I added a second bath I would likely gain about 30k to the purchase price, and only a cost of about 15k to install. Is it really worth it, if I'm short selling anyway?? Would it make me more likely approved?
No, this agent must have a brother in the construction business.
If you are selling your home, do the best you can with what you have. Clean it, maybe a little spiffing up (paint, plants, flowers, etc.), but that is all.
Agree, you will not recover the cost of a bathroom addition let alone make 2x, especially on a short sale. Don't do it.
Since banks want to see a hardship that prevents you from paying your mortgage, spending money on an addition instead of your mortgage will not help your case for a short sale.
Thanks folks. I am actually the one that inquired about the second bath, based on some comps I saw. BUt she did say I would almost double the investment. The contractor is actually a friend of mine, which is why I could do it on the affordable side, but it's still didn't seem worth it to me....
Someone did tell me though that if you sell short you are responsible to pay taxes on the difference??? So if I'm short, that means I have to pay like $40,000 the next tax year? Can that be right? Might as well foreclose at that point.
If you have $15k lying around the bank isn't likely to grant you a short sale anyway, and while you don't currently have to pay taxes on the amount forgiven by the bank on either a short sale or a foreclosure (if the bank agrees to forgive it, they have every right to make you take a loan from them for the difference), that tax 'break' expires next year whether for a short sale or a foreclosure.
Spoke with a realtor and my house is basically going to sell for almost 100k less than I paid five years ago, as is. She did advise me however, that if I added a second bath I would likely gain about 30k to the purchase price, and only a cost of about 15k to install. Is it really worth it, if I'm short selling anyway?? Would it make me more likely approved?
Tell her you will add a second bath as loon as it comes out of her commission
And I don't understand. You're in a short sale because you can't afford your house and you have an extra 15K sitting around that you can invest in it? Do you really need help in a short sale or are you just playing the system?
I currently have a 435k mortgage on a house that *in my realtors estimation* would sell for about 335k. It's a 4bd, 1 ba cape. My in-laws are willing to give us 50k to make up the difference on the loss of our house, so that we could relocate since I may be losing my job in the very near future.
Clearly, though 50k, does not cover the spread, so I inquired with the realtor if adding an additional bath would bring us to a break even point. She said that with the 2nd bath (doggie dormer), the selling price would be more like 365k. Again, still short quite a bit there....which is why I questioned her suggesting it since it would likely be a short sale either way. I thought perhaps it was to adoid some of the tax implications, but now I stand corrected on that.....
We are more than willing to do some sort of "short payoff"/"promissory note" for the difference, but Bank of America told me that they simply *don't do that*. My realtor is also in the process of negotiating with an attorney that is familiar with short sale, so she's gonna see if we can work something out.
Thanks folks. I am actually the one that inquired about the second bath, based on some comps I saw. BUt she did say I would almost double the investment. The contractor is actually a friend of mine, which is why I could do it on the affordable side, but it's still didn't seem worth it to me....
Someone did tell me though that if you sell short you are responsible to pay taxes on the difference??? So if I'm short, that means I have to pay like $40,000 the next tax year? Can that be right? Might as well foreclose at that point.
It is not possible to answer this question without more detail regarding the home, your loan and financial circumstances.
In general, if the home is your primary home AND the loan was used to purchase the home (not an equity loan that you used to take a vacation), the Mortgage Debt Forgiveness Act allows you to exempt any forgiven debt from your taxes. If it is an investment property, all bets are off. You need to consult with a RE Attorney to review your mortgage docs and discuss your situation to better understand your state laws and tax liabilities.
BTW the Mortgage Debt Forgiveness Act expires at the end of 2012.
Someone did tell me though that if you sell short you are responsible to pay taxes on the difference??? So if I'm short, that means I have to pay like $40,000 the next tax year? Can that be right? Might as well foreclose at that point.
This is a complicated question, but if it is not your personal residence, then yes this is true.
And, no...do not put a dime more into the home you are trying to sell short.
Last edited by coastal chic; 05-10-2011 at 11:38 AM..
If you are selling, it is foolish to put one penny more into capital improvements. You just want to maintain what you have and the price offered will reflect that. A short sale buyer is going to lowball you anyway and it is the BANK that will be accepting the price and not you.
You are going to need that cash to pay the deficiency judgement after closing.
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