A few days ago, I was asked by a friend, â€œwhatâ€™s a short sale?â€. My response was, â€œdo you live under a rock?â€. The conversation went on, he told me he had of course heard of them, had no idea what theyÂ reallyÂ are, and that they sucked. In reality, they donâ€™tÂ suckÂ as much as they used to. Â This conversation helped me realize that even though we hear and use the term all the time, not everyone necessarily knows exactly what a short sale is.
A short sale is when someone owes more on their home then they can sell it for. You make a deal with the bank to sell it for less than you owe, and they donâ€™t make you pay the difference. Not a bad deal, huh? Â The reason youâ€™ve heard so much bad press about them is the short sale process use to take forever, and for agents, are the most difficult homes to show and sell. The short sale process has sped up quite a bit and there are new ways to make the experience better for buyers and sellers.Â You can read more about short sales here
A short sale isnâ€™t Â for everyone. You have a couple of other options too. If you really want to keep your home, you can try to get a loan modification. Sometimes, your bank will allow you to restructure your loan to make it more affordable to stay in your home, or better yet, forgive the negative balance on the loan, adjusting it down to market value.Â Loan modifications have always remained low in comparison to short sales and foreclosures simply because most people who canâ€™t afford their homes have some kind of financial hardship that prevents them from qualifying. In 2012, our government is launching a program that will allow you to refinance your home at a very low interest rate whether your bank wants you to or not. Weâ€™ll do a write up when it comes out.
Another option is foreclosure. You can stop making your mortgage payments and live in the house until the sheriff shows up. In 2011, we saw less foreclosures and a lot more short sales. There are many reasons for this. A short sale is better on your credit than a foreclosure, allows you to control when you move (and you can do it quietly), some programs pay you money to do a short sale, and you can buy another home within 3 years.Â You can read more about short sales here
Why does all this matter? It looks like our market will continue to be dominated with short sale inventory for the next couple of years. If you plan to purchase a home, donâ€™t rule out short sales simply because they can take more time. If youâ€™re planning on selling your home, you will compete against short sales in the market (this can be an advantage). Working with an agent that is familiar with short sales is important. Not all agents are qualified to work this kind of a sale. Not only is our team experienced with short sales, but we use several short sale negotiators to help us with our short sale transactions. The advantage is having a full time Realtor talking to the bank, negotiating, and handling the paperwork, allowing the rest of our team to do our job of marketing our listings, showing homes and making offers, and servicing our clients.
If youâ€™re considering a short sale on your home,Â click here to see if you qualify