Looks like the housing market is bad in more than just Miami. I just got this email from a real estate agent based in Florida regarding a Short Sale.

We have several sellers ready to walk away from their property without a penny. We have begun negotiations with the sellers lender who has expressed a desire to sell quickly and accept far less than the loan balance. Now I am looking for the buyer (you) who wants to buy a property at a huge discount.

Here is an example: Seller paid $260,000 last year for a BRAND NEW, 2,300+ Square Feet, 3 Bedroom, 2 Bath, 2 Car Garage, Covered Porch Home in Palm Coast Florida. The best offer we have is $135,000. We are looking for the highest and best. I don’t know how low the bank will go. It is up to you to offer. If you don’t the guy may get it for $135,000.

We have a lot of these and we get more everyday. If you want to Buy or Sell, Call Now

A Short Sale is where an owner is upside down on his house (his mortgage is higher than the house is worth) and the bank is willing to take less than they owe on it. Why would the bank take less? Because the home owner is several months behind on his payments, and has probably tried to sell it for what he owes for a few months with no success. It usually costs the bank around $50,000 to get rid of a house once its been in foreclosure, so in order to speed up the process and avoid going through the hassle, they agree to a short sale.

The seller is benefited since he doesn’t have a foreclosure on his credit. However, the bank usually sends out a 1099 tax statement for the difference. Which means the seller is still stuck with a tax liability. But paying 30% on a $100,000 is much better than paying the $100,000 from your pocket and not getting to deduct it as a tax loss! (To be more specific, homeowners cannot deduct the loss while investors can). So the only person truly benefiting is the buyer of the property. So long as he can afford the payments and doesn’t need to sell it at a loss in another 2 years!