Is a Short Sale a Viable Alternative to a Foreclosure?
Nobody likes to see a homeowner have to give up his house, but these are painful times and the fact is more and more foreclosures and short sales are occurring each day, especially in the hardest hit markets of Las Vegas, Los Angeles, Phoenix and Miami.
Most of us know what a foreclosure is. It’s a procedure that occurs when a mortgage holder takes legal action to gain possession of a residence because someone has defaulted on his/her monthly payments. But what is a “short sale”? Yes, it has to do with a certain kind of stock market transaction, but amid the real estate industry’s current turmoil, it also has to do with getting out from under oppressive mortgage burdens that some homeowners can no longer afford to carry.
How does it work? Essentially it is a transaction in which a property is sold for less than what is owed on the mortgage. For example, a homeowner with a $100,000 mortgage who can no longer make his/her payments may be able to enter into an agreement with his/her lender to sell the home for $90,000. The bank loses $10,000, but knows it will get most of its principal back and avoid the foreclosure process, which is both costly and time-consuming.
Although there are no nationwide statistics tracking short sales, the practice is clearly on the rise. An experienced real estate agent can provide invaluable hands-on help to the homeowner who decides to sell short his/her property. Of great importance is the owner’s ability to preserve a clean credit rating and avoid foreclosure.
There is a lot you need to know in order to reach a satisfactory agreement with the lender. Who do you specifically work with in a system that often seems complicated and bureaucratic? How do you demonstrate a hardship situation? How do you speed up the process? How do you avoid a capital gains tax on the difference between the amount of the mortgage and the actual selling price? These questions require the guidance of a thoughtful and knowledgeable professional, someone who will be by your side to negotiate the highest price and then follow up and get the bank to agree to the sale.
Having recently been involved in short sales, I know how overwhelming it can be for a homeowner to have to surrender his/her home. By offering proper guidance, not only can I get the problems solved, I can also work with compassion and understanding, which is extremely important to me.
Call 928-300-5050 or E-mail me at Lee@LeeCongdon.com
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