More Short Sale Buzz!

We Still Keep Hearing About Short Sales … Are They Real and Why Should We Do It?

Short sales are very real but they have become as confusing as the market itself. There are several aspects to a short sale when you are considering one. The first is to make sure you qualify, i.e.- you owe more than the property is worth (call your agent for a current value – things are changing quickly), have limited other assets, inability to pay, don’t own other real estate, etc., in other words … you have a genuine need for debt relief. Once you’ve determined that (not hard if you are truly qualified!) the next step is to consider options – short sale vs. foreclosure vs. bankruptcy. Each has it merits depending on your circumstances.

Bankruptcy is usually the least desirable. It can extend the time you can live in the home but has many extended adverse impacts on you, your credit, and your mind. Foreclosure is the likely option, inevitable in some cases, if you can’t or won’t put together a short sale. So what is the difference to you? 1. A short sale will typically last 3-4 years on your credit report. A foreclosure will be there 7 years. 2. With a short sale your credit is not as severely impacted. A foreclosure can reduce your FICO score up to 400 points. A short sale will impact it 50-180 depending on how it is reported. 3. A short sale is a more dignified solution. You sell your home to another person just like your neighbors do. A foreclosure often results in the home being vacant for months, signs promoting the bank ownership of the property, dead landscaping, etc. 4. It is usually easier to rent a home to move to with a short sale than after a foreclosure. Most landlords check credit on tenant applicants these days.

There is now tax relief due to a law passed last year and signed by President Bush in late December. It does not help every individual that gets mortgage relief, but it will help many. Regardless of the tax relief you get, or don’t get, it is generally better to control your own destiny and work to effect a short sale, or settled agreement with your lender.

Our Advice: The foreclosure option requires no action …don’t make your payment…wait until the date of the sale…and move out. The short sale requires marketing your property, providing the bank with proper documentation of your need including a hardship letter, financial statement, pay stubs, tax returns, bank statements, etc. - work on your part, often unpleasant because of your present financial circumstances, but it is usually worth it for the long term positive effect on you. Additionally, helping the lender out of their investment problem instead of forcing a foreclosure is something you can do to help the institution that committed to help you when you wanted help … when you wanted to buy your house. Make every effort to implement a short sale … you will be happier in the shorter-long run.

A short sale involves a lot of work by your agents, it also requires them to have specific knowledge of how to navigate the inevitable maze the corporate lender makes agents run through. If you are having difficulties making your payment call your agent immediately to explore your options. Waiting won’t solve the problem.

Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com or www.carsonvalleyremax.com , email us at carsonvalleyland@hotmail.com 775-781-5472 toll free at 800-814-8799 ext. # 254.