Some of you still aren’t sure what a short sale is and others thought you would never need to do a short sale.
Well, the short sale is here and it isn’t going anywhere soon. But how does it affect you?
A short sale is when owners try to sell their property “short” of what they owe on it.
For instance, you bought your property for $500,000 with a loan for 100 percent of the purchase price and now the current market value is $350,000. You are asking the lender to relieve the other $150,000 of debt, which requires your lender’s approval. Ironically, bank time frames on short sales are anything but short.
But don’t despair if you must pursue this avenue. Creditors do account for the short sale process as an effort towards paying your debt. While a short sale will downgrade your credit, it also shows you did what you could.
In recent months, however, some institutions have become much more efficient with their short sales than in the past. I have had a short sale close 45 days from the time we wrote our offer; this was fast but it is possible.
A short sale can offer you relief from a mortgage for financial hardship or financially strategic reasons and allow you to get on the path to rebuild your credit.
While this prospect can affect those who bought in a rising-price market, as above, there are still others that bought with a five-year Adjustable Rate Mortgage (ARM) loan. So those who purchased in 2005 or 2006 will see the ARM change their payment, which could put their mortgage out of their budget.
So if you’re looking to buy, there are potentially several more waves of people who would choose a short sale, and this represents properties at significant discounts.
Many more people who intended on keeping their homes are now learning that the renegotiating of loan terms doesn’t have a very good success rate. These people were hoping to refinance for any number of reasons but with bank-owned and short sales the property values keep dropping and make a refinance next to impossible unless you have a lot of equity built up.
If you are selling, buying or staying put as a homeowner, short sales affect us all. Values are impacted, time frames are lengthened, but there are deals to be had.
If you are considering a short sale, always speak to a real estate professional you trust. Whenever making a large financial decision, always consult your accountant or attorney as to how different courses of action will affect you in your specific situation.
Choose a reputable Broker who can give you and your property the attention it needs. Each lender handles short sales differently so choose a professional who knows the process, will work for you and bring you a quick resolution.
Realtor Bo Bortner offers his sound advice and personal knowledge of the industry as a successful agent with Team Metro Real Estate. He can be reached at (619) 840-2981 or online at www.bobortner.com.