So many homeowners in my area are facing increasing difficulty paying their mortgage. Most of the people that I have talked with are decent people who got in over their heads because life dealt them something unexpected (loss of a job, major health problems, etc)...they don't want to default on their mortgage...they don't want to face foreclosure.
When counseling these people, I first recommend that they contact their lender and find out if they can refinance their existing mortgage into a mortgage with an affordable payment. Although current market conditions in NY are poor, things will turn around in a relatively short period of time, so if they can afford to pay close to their current payments, the bank is likely to restructure the loan to terms that can be lived with.
If the bank will not restructure the loan, then a short sale is the best answer for all parties involved.
It is most likely that the loan is quaranteed under some federal or state program so the bank can be paid back the amount of the loan that is 'short'. In addition, a short sale will save the bank approximately $30,000. in foreclosure costs. The property will be sold more quickly at a price that is more attractive to buyers. In our area, it will still take 3-6 months to complete a sale thus giving the homeowner time to put their lives back in order. And, with the recent federal decisions, the amount of the short sale is not taxable to the already economically stressed homeowner.
From the Realtor's point of view, short sales are highly stressful. The banks and PMI investors are quite demanding in keeping to very tight time frames for closing; they require a great deal of backup information to prove current market value and sufficient exposure of the property; they want buyers that are willing to risk the costs of sale in order to move toward closing quickly...all of this increases the amount of time that the Realtor must spend on the transaction which takes away from the amount of time that can be dedicated to doing new transactions.
Since we are 'commission only' salespeople, I understand why many Realtors won't work with short sales, however, there is a certain sense of satisfaction...a sense that I've help people (sellers) out of their difficulties and helped others (buyers) achieve their dream of homeownership...
It isn't always about the money!
Teri Powers CRS GRI, Keller Williams Realty

Tue Apr 22 2008, 09:04

Why walk away when one can stay until someone kicks you out

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOluO…

Wed Apr 9 2008, 06:52

The whole real estate market / bubble is just a good example as to how our country has gone to crap. Why even bother with a short sale, just walk away. Everyone lies on their loan app about their income, their mortgage broker most likely helped them anyways. They didn't want the house, they just wanted to live there a year and flip it OR they wanted a huge 3500 square foot house even though it's just two people, but forgot about the $1K in utility bills a huge box costs to climate control. Just walk away and let the bank eat it. I'm sure we will get to watch our gov't bail out the Wall Street slime while the responsible middle class savers suffer.

Tue Apr 8 2008, 22:20

check on the link, you'l find all the option a distressed home owner can have


http://www.onestepuprealty.com/bin/web/real_estate/AR253458/…

Sat Apr 5 2008, 22:54

The real question is why would you want to stop homeowners who need to sell because of something in their life has prevented them from being able to afford their homes. A short sale is for a homeowner that is hanging on by a thread making partial or all of their payments but are really struggling due to loss of a job, disability with health issues, divorce, death of a spouse, illness of a child... many unfortunate changes in life. This is a viable and valuable win-win situation for all involved. The bank agrees to accept a lesser fee for the outstanding mortgage. Foreclosure costs the lenders a lot of money and most of the time they end up with the property at the courthouse steps. So they don't want foreclosure. The Realtor can sell the home for less which will make the home sell faster. The homeowner does not have to go through foreclosure and ruin their credit. Don't think for a minute that a short sale does not have consequences for the homeowner. In most cases, they come away from the sell with no money. It is hard on a Realtor to do a short sale so if you need to sell quickly, please make sure you hire a Realtor with experience and systems in place to make it happen. I see so many MLS listings that are short sales that never make it to closing. Then the homeowner automatically goes into foreclosure. Personally with my Paralegal degree and experience with title searching, I know what is involved with corresponding with the bank/lender's personnel. It is not pleasant and very time consuming. Most of the personnel that Realtors have to deal with are overworked, stressed, angry and very unreasonable. Short Sale Realtors liken them to DMV employees. As a Realtor, I stay away from short sales. It takes too much time away from servicing other home buyers in my real estate business. I do council other Realtors who want to try a short sale and I know many agents that have been successful at closing a short sale. If you need to sell this way, I can refer you to many short sales specialists across the country that I blogg with.

Now to answer your question what impact would be for the new buyers in our present market? I show my buyer clients short sale properties all the time because they will get a home with equity already in place. Problem is they have to usually wait weeks before their offers are approved and it can take a month or two before it can close. Usually, there is no negotiating the list price that the bank has set. Most of the time the property is sold as is with no repairs. If the buyers have the time and extra money for minor repairs, buying at a short sale is the best for them. Buyers this is different from buying a foreclosed home. This is legimate buying before the foreclosure.

For a Realtor, the commission is usually decided by the bank and the Realtor does not know if the bank may decide the commission to be lower than originally stated. I don't mind representing the buyer in a short sell but the Realtor that list a short sale property is a SAINT.

Sat Apr 5 2008, 09:10