Jerry LaRose, P.A.,ABR, GRI, e-PRO, CLHS Orlando, Florida Real Estate Expert

Median Sales Price for homes in the Orlando area as we all know has decreased significantly. Everyone is asking, where's the bottom. Well, I'll be the first to say that I see the bottom. I will go on record to say that we're almost there.

I pulled this trend chart from Trulia and it represents the median sales price of homes. The most important lines are the black and red. The black line is actual sales of the median priced home. Notice that this jumped out of proportion during 2003 & 2004. If prices had not jumped due to supply and demand and had just progressed normally at a 3-5% increase, that average which is represented by the red line would be approx. $190,000 today.

However, the actual today is at $210,000. Therefore, I see the market still correcting another 10% and possibly more. Nothing says that we can't go below this line. That may be possible for a short period of time to clear out the foreclosures and short sales. So there it is, my crystal ball is telling me that the market in Orlando will continue to decrease another 10% - 15% overall before we stablize.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden, or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

Buyers:

1. First understand that this process may take 90 days after you've submitted your offer. Don't go into a short sale if you have a specific timeframe that you must have the home closed.

2. Understand that there are no guarantees in a Orlando short sale.

3. The lender may require more cash or a higher price up to the actual moment of closing.

4. The lender will most likely not allow the seller to pay any of your closing costs or give allowances for repairs. Typically, all deals are "AS-IS".

5. There is likely no certainty of the final price or closing date until just before closing. When the final word comes down from the lender that they'll accept the offer, typically they'll want to close in a week or less. Have your inspectors and lender ready to move forward.

6. Be sure there's an out for the buyer if the contract is not approved by a certain date. You don't want to be stuck in limbo waiting for the lender. Make it contingent upon some reasonable date.

7. Don't pay for inspections or any other expenses until you know the lender has accepted your offer.

Short Sales could be a great way to purchase property at a discount as long as you have patience.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden, or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

1. First and foremost I would always recommend anyone considering a short sale in the Orlando area to talk to your tax advisor first.

2. I posted in my FAQ's on short sales the following:

Is the seller going to get hit with a tax bill or a 1099 if you do a short sale?

Upon successfully closing a short sale, lenders will always report a loss to the IRS and issue a 1099. However, the Mortgage Forgiveness Act of 2007 was signed into law on 12-20-07 and is now official, effectively getting rid of the question "will I be taxed on the Short Sale". Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was potentially taxable income to the borrower.

This was the subject of much media attention and led to many questions and concerns from Sellers wondering whether or not they were going to get "hit with taxes" on the Short Sale.
The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007 to the end of 2009.
This will effectively put an end to the question from Sellers... will I be taxed on the Short Sale discount. The definitive answer (at least until the end of 2009) is NO!

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to:
http://www.govtrack.us/congress/bill.xpd?bill=h110-3648 or http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html

However, I would like to amend that statement and say talk to your tax advisor or attorney, I recently met with an attorney and got a clarification on this law. It was his understanding that this rule only applies to homeowners that occupy the residence and this is and has been their principal residence for the last 2 out of 5 years. YES, your principle residence and you must have lived in for the last 2 years.

I also understand that if you took a Heloc loan or an equity loan and it was not used on and for the home you also may get taxed on this amount even if it's your primary residence. In other word if you took out a Heloc loan for $50,000 and spent it on a boat. Sorry, you have to pay the tax consequence on this amount if the bank eliminates this debt.

The bottom line here is that only Acquisition funding can be forgiven by the Mortgage Forgiveness Debt Relief Act of 2007.

3. Foreclosure, Deed in Lieu and Short Sales are all treated the same in regards to taxes.

Summary: Any cancellation of debt is a taxable event except for any acquisition funding for your primary residence that you've lived in for the last 2 years. Everything else is taxable.

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1. Your credit score may fall 100 points or more.

2. You may be asked to sign a note or take a new loan for the amount of the short fall.

3. The lender may get a judgement against you for the amount of the short fall.

4. You may have to pay income taxes on the amount of the shortfall - it could be taxed as income to you.

5. Understand that you will have to prove that you cannot pay. Similar to how you qualified for the loan, but now you have to prove that you cannot afford this loan. What's changed/

6. Understand that big discrepancies or a big gap between your income/assets used to obtain the loan may indicate mortgage fraud, unless employment or expense circumstances have drastically changed.

7.You will need to get in writing from the lender that they will approve your contract for a lower payoff.

8. Some lenders won't talk to you until you're behind in payments on your mortgage.

9. Make sure you and your realtor disclose everything to the buyers on the front end.

10. Contract must contain ad addendum stating that the sale is contingent upon approval by the seller's lender of a reduced loan payoff.

11. Property should be sold "AS-IS" to make it as simple as possible for the lender.

12. The home should be listed for sale close to market value at first and the price reduced over several weeks, showing the lender that you tried to sell higher and no one bit on the higher price.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden, or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.