Market Conditions in 60126>Question Details

Olivia, Other/Just Looking in 60126

What are the reasons that homeowners are opting Short Sales? Have they lost their jobs, gotten their hours cut.. or had an adjustable rate mortgage?

Asked by Olivia, 60126 Fri Apr 13, 2012

Just curious if the Reatlors see a trend as to why homeowners are having to go the Short Sale Route.. is it because they have reduced income, lost their jobs, or had an interest rate jump?

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Olivia - It is all the above and more - or it simply could be that the owners are upside down on their home (where the mortgage balance is higher than what the house is worth), and they need to move because of their job, or they need a bigger house because their family has grown etc.

So many reasons.......
0 votes Thank Flag Link Fri Apr 13, 2012
Olivia, I am assuming that you are asking why current homeowners are selling via short sale (not why buyers are purchasing them). There are a variety of reasons people sell via short sale. Initially short sales were intended to assist people with life-altering events that changed their ability to pay for or stay in their homes. It was a more graceful way of stepping out of a loan that they simply could not repay than foreclosure. It appears that more frequently (in today's market), people selling short sale because they need to relocate (for employment, schooling, family, etc) but owe more on their homes than they can sell them for. In other words, short sales are less about true hardships now than they were before - but rather are a kind of market correction. The fact is, you can no longer assume anything. If you are considering a short sale (whether you are a buyer or seller), be sure to work with an agent who knows what they are doing in the short sale market since the negotiating and paperwork are different from traditional sales.
0 votes Thank Flag Link Fri Apr 13, 2012
There are various reasons. Some had obtained 0 down, interest only loans thinking the
appreciation alone would carry them. Every market is cyclical. When the market switched from a seller's market to a buyers market many of those people who had paid
top dollar in 03', 04' or 05' really took a beating. If they had to sell because of a job change or the loss of one or more incomes, they really took the hit. Their home value had gone down and since they had no money invested in the property (no equity) their homes were worth less than they had paid for them. They were then upside down meaning that they owed more than the house was now worth. Betsy S
0 votes Thank Flag Link Fri Apr 13, 2012
Olivia,

In order to qualify for a short sale, the homeowner must have experienced a financial hardship that has or will in the near future affect their ability to pay the mortgage. All of the reasons that you mentioned are part of that.
0 votes Thank Flag Link Fri Apr 13, 2012
I think they are opting for short sales because they get more house for the money and that is the reason. They have not lost their jobs or had a reduced income, they simply want more house than they can actually afford.
0 votes Thank Flag Link Fri Apr 13, 2012
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