“Short Sale” seems to be catch phrase of the real estate industry today. Most people assume that short sales are for people who have been irresponsible with their finances. This may have used to be the case a couple of years ago, however the current market is a little different now.
Most short sales today are because of job loss, loss of income or something that was not related to responsible behavior. Responsible borrowers are finding themselves in need of selling their homes because they can’t keep up with their payments or because they have no more equity left in their homes due to the downturn in the economy.
A short sale can help a seller avoid a painful foreclosure and may even put some money in your pocket. It also helps avoid a substantial ding on your credit report that would have happened if a mortgage ended in foreclosure that could have stayed on a credit report for over 10 years.
Even after everything is done, a foreclosure can come to haunt future homeowners when the time comes to buy a new home. On average it takes anywhere between three to five years before homeowners who go through foreclosure are even allowed to purchase a new home. Most people assume that the lose of money is the worst part of a short sale. In reality a short sale can be a huge boon to the home owner in distress.
The benefits of a short sale isn’t just for the seller. The lender is also highly motivated to cooperate with a short sale. You should remember that banks are not in the business of real estate, they are in the business of lending. Having homes that are not generating mortgage interest is only creating losses for the bank. If a bank decides to go the short sale route, they also avoid a costly foreclosure process.
As the economy fluctuates, the house can lose value even further, creating even more of a loss for the bank. All of this doesn’t include the cost of maintaining a house when the bank owns it. By going the short sale route, the bank can cut short their losses in exchange for foregoing the possibility of getting a much higher value for the home at an auction after foreclosing on it.
Thomas is the content manager for GetMyHomesValue.com, a home valuation company that connects Home Sellers with experts who can help them properly value their home.
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About Brent
Hi Brent,
Believe your site is very helpful for people faced with the probability of a short sale. My personal experience with a short sale is detailed at http://navigatingmortgagecrisis.com/ and this story may be helpful to your clients. The book is very consistent with your message.
Bob
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Just learning about short sale investing, so this was very informative for me. Thanks!
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Great information. Unfortunately many of today’s short sale sellers are not irresponsible, they are just caught in circumstances beyond their control.
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In the areas where I have been searching, it seems like almost half of the home available are short sales. Good point about people not being irresponsible. If you bought a home 4 years ago or less, you are looking at a short sale if you want to sell it.
There are some irresponsible people stripping the homes down to nothing. This is why the average buying is going to need a rehab loan, such as the FHA 203K. Buy and rehab all in one!
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Hi, this article is so good. Could i use these informations for my blog?. Greetings from the Speedy DNS.
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Thanks for focusing on the concept of short sale, working of short sale process and how to deal with it.
This information will definitely help the people dealing with short sale
Newport Realtor recently posted..Balcony Collapse Case Turned Over To Insurers
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If the lender approves the short sale, will the seller be responsible for any portion of the difference?
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