IS A SHORT-SALE RIGHT FOR ME?

What is a Short-Sale? A short-sale is the sale of a home at a price that is less than the amount owed, by agreement of lienholder(s), seller, and buyer. You may ask, “How do I know if a short sale is right for me?”

If you bought or fully refinanced your home from 2004 to 2007, in the Central Valley or East Bay, as well as in other areas of the nation where appreciation sky-rocketed during those years, fueled in part by speculative investing and aggressive lending, it is very likely you owe considerably more than the home is worth. In some areas, such in Tracy, Stockton, and Central Valley, we are seeing prices drops now at 20 year lows! But, being “upside down” by itself may not be adequate justification for a short sale in the eyes of a lender. There usually needs to be additional compelling factors, such as financial distress or a forced relocation, as examples, and, therefore this course of action is right for some, but not others. How can you know?

Are you being required by your employer to relocate?

Have you fallen behind in your mortgage payments? Are you facing foreclosure?

Have you received a Notice of Default? (If so, in California, you are 90 days away from Notice of Trustee Sale, which, once attached to your door, marks 20 days from an auction date - on the courthouse steps.)

Are you concerned about the bank taking your home?

Overall, are you struggling financially?

Do you owe more than your home is worth?

DO YOU KNOW ANYONE FACING THESE QUESTIONS OR CONCERNS?

If you answered “Yes” to some of these questions, and, if you have questions about a short-sale to avoid foreclosure, you should contact a qualified Realtor, who has the expertise to handle a short-sale effectively, and to advise objectively. (Not everyone does!) It is important that you know your options! (Also, in addition to a qualified Realtor, always seek advice from a tax advisor, and/or attorney when considering a short-sale! There are possible legal and tax ramifications that must be explained.)

Some advantages of a Short-Sale include:

Avoiding the credit damage of a foreclosure which can limit the opportunity to finance another home for at least 4 years. A short sale will allow the homeowner to finance another home purchase after 2 years. In short, it is less damaging in the long run. But, we need to realize there is no way to forecast the lending climate a few years down the road!

A short sale listing usually holds off a trustee sale, provided the short-sale process is initiated in a timely fashion. Lienholders are very aware that a foreclosure proceeding will cost them much more than a short-sale.

Breathing room and some peace of mind. The homeowner, knowing that a professional realtor is handling the short-sale, and he has consulted with his tax and legal professionals... can "relax" a bit. The banks will usually back off. And this also gives the homeowner an opportunity to put some reserves away for a fresh start.

Drawbacks can include certain tax liability, and legal exposure, for some. Again, this may the best remedy for some, but not for others. Always seek counsel.

My summary opinion: This writer has seen homes in the Bay Area that had been legitimately valued from $800,000 to over $1 million (US), just a few years ago, now selling in the range of $300K - $400K. I recently also saw, within our own company, a short-sale listing for a 4 BR home with pool in the Central Valley, for under $150K. Not uncommon. That home was likely more than double the value just 2 years ago. There is just no way most homeowners, who may have bought in the time-frame referenced and possibly financed to the eyeballs, are going to make up that shortfall and loss of "equity," especially those who had loans that may have added fuel to the fire. In the hardest hit areas, 50% or more valuation drops are driving this train. Add to that a series of circumstances such as a job loss or a loss of income, illness, divorce, and the situation can be fairly ugly. A short-sale therefore should not be viewed as a frivolous action; rather, it should be regarded as a legitimate remedy. And sadly, most banks have been very slow to offer assistance, in the way of loan modifications that actually provide realistic remedies for homeowners in distress, leaving a short-sale often the most common-sense option for many.

If you reside from the East-Bay Area to the Central Valley, including Brentwood, Antioch, Tracy and Stockton, Manteca, Discovery Bay, Modesto, Lodi, Elk Grove all the way to Sacramento, or even Pioneer! (San Joaquin, Sacramento, Solano, Alameda, and Contra-Costa Counties), feel free to contact me for a confidential and discreet review of your siuation. Outside of our area, do your homework and find a realtor with experience in short-sales, in addition to a good real estate attorney with short-sale experise (most will provide a free consultaion). Check your area Bar Association for a referral if needed.

For additional tips, feel free to check out my Real Estate Tips newsletter: http://www.clientdirect.net/news/?Pub=38484.

Buyers and sellers may also see my site to view short-sale and banked owned properties for sale: http://www.MikeKetchel.PMZ.com.

I hope this helps.