Realtor to REI

I am a bit of a novice in REI but have been a Realtor for years and figure I have an edge and it makes much sense to further this route!

I have been reading this forum and decided it looked like the best place to get some REAL answers. I have absorbed a-lot of material in Real Estate and will have many questions in the near future since I believe a deal has found ME to get into and I do not believe I wish to pass it up.

A bit of background. I am a part time Realtor, assisting my wife in her full time Real Estate career. I have learned that a Double Agent team is much more likely to produce a better income than a single agent and I like working with her on the weekends. I have considered going full time with her but I have a full time career in software that is lucrative enough to keep me in at as well as a long term steady stream income that will become invaluable during REI transactions.

I have some questions that I am sure will be scoffed at by some of the “Old Hats” here but still believe any questions left un-answered in the REI game can haunt later.

My first question is in regards to a SS where the Lender is happy to grant me my offer of $15,000.00 less than what the owner owes to them. My question is what is my liability to the Owner if/when the bank goes after the owner for the difference?? Is there a way to ensure that the Lender won’t go back to the Owner for the difference or is the answer "Well it’s still better to owe the Bank $15,000.00 rather than a Foreclosure?

Thanks in advance!


If the lender accepts a short sale payoff they will reconvey their lien and give up their right to pursue a deficiency against the borrower. Thats the good news. The bad news is that it may be a taxable event for the borrower. See this thread:;action=display;threadid=23704

I looked at this thread and it seems that there is a possiblity that the HO may end up having to pay income on the deficiency but only if the lender provides the 1099-C according to the FMV, correct so far?

Is it enough for an REI to let the HO know that this is a real possibility and he should consult his tax accountant for further info or should that be up to us to do? Would an unknown like this spoil a good deal if he were to find this out later or does this need to be addressed in the Purchase Agreement Contract in any way??

I doubt if the matter of potential tax liabilities should (or even could) be addressed in the Purchase Agreement. But, as a license holder, you probably should give the seller a written disclosure of this potential. This should be done to protect you in case of legal issues later on. As a license holder, you are expected to have more subject matter knowledge and the seller could move against you legally later.

Ask if their accountant can prove insolvency, then the 1099 is a waste of paper.