Newbie Short Sale Questions.

[Matt Gill]

I am new to REI and Short Sales.

The property is in distress and needs 30K in repairs due to their tenants trashing it. I have been in good contact with the owners about purchasing the property for my business' office (zoned commercial/residential). Neither I or they have an agent. They want out (They have 2 other properties in distress and are looking at bankruptcy and cannot afford the payments), and are ready to give the property to the bank at the end of this month (March).

They bought the property for 158K in the summer of 07 and still owe 150K. I won't pick up the 150K with the amount of work needed so I suggested a short sale. Problem is I have never done a short sale so here are my questions:

1. Their concern is not having to pay the bank the difference but from what I have found, I can create an addendum that waives their obligations, correct? (if they accept it)
2. I think I have a good understanding of how the process works from reading here and various other sources but am I biting off more than I can chew as my first REI?

Any help is greatly appreciated.

[Jon Holdman]

Even if you get the bank to not pursue a deficiency judgment, they will likely get stuck with a tax bill for the forgiven debt. Changes have been made to avoid this for principle residences under certain circumstances. But an investment property is very likely to generate a 1099 and the accompanying tax bill.