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April Is National Fair Housing Month
Home short sale reasons abound from financial and economical to social: the previously overheated housing market, overbuilding, out-of-hand
mortgage industry are all factors that, combined, brought the housing
industry to its knees.
These are but few factors why we are currently experiencing such crushing number of homes being sold in non traditional ways, primarily through short sale, foreclosure and, as of lately, in a small scale via deed in lieu of foreclosure.
And consequently these instruments although helping to clear the housing inventory, do bring the price down significantly.
So the quicker we get back on our economical feet again the better it is for the economy and for real folks like you and me: Selling homes in short sale is one very instrument to expedite the recovery.
This is perhaps the strongest among my home short sale reasons.
Financial And Economical Home Short Sale Reasons
In the years following the bubble burst, circa 2008, too many home owners were caught paying mortgages on homes that have been seeing fast and steady decline in value ever since. And I just cannot affirm that prices have reached bottom as yet.
Many home owners in these circumstances want out if they possibly can -- for that reason alone.
However as a double whammy many of these people already under water on their mortgage have their income diminished and, in fact, countless of them lost their jobs altogether.
So now we simultaneously have massive number of home owners who, mostly for no fault of their own, are trying to sell houses in a down market during the second longest recession this country has ever experienced [shall I risk to say “Triple whammy?”]
So, in view of this extraordinary scenario [still unfolding], the help of government as well as a hand from lenders – the later perhaps benefit the most in the boom times and can stand to profit again as the housing market comes back to health -- is in fact an action of mutual interest.
Lenders are taking a lose but they stand to have a “healthy” market sooner
For you, the buyer, what is important to know that – if you are patient AND you can wait – you stand to buy a house that even a few years earlier could be in the market for as much as 100% of you now can buy for.
Because real estate is not an “exact science” we generally agree that the true value of home is how much someone is willing to pay for it.
So there are countless properties in the market today that are selling for about half of what the seller paid for it.
Very recently I was the agent for a couple who bought a house for $260,000: The original owner paid over $480,000 – the house was in move-in condition [except for some minor cosmetic things] but things were still like new – the fireplace on the big family room had never been used. That bank took a huge loss.
I that of this writing, I am the listing agent for a short sale which is being negotiated at $140,000 the original mortgage was for over $300,000 – I know that in your mind you already made a quick calculation that the lender is taking a huge loss as well.
So there are losers:
Banks need to take a huge lose in their portfolios – and haven knows we have seen the very foundation of our economic system been shaken. Countless of small banks and independent lenders did not survive – the big ones got a run for the money.
So it is understandable that -- as I describe on Short Sale Homes page – it takes a long time for a short sale transaction to go through because these entities that were created with the goal of navigating successfully through the economic waters are now faced with decisions that will hit their bottom line in a big way.
It is not an easy decision and it must weigh pretty big on the shoulder of those who make that call.
Let’s not forget that each home owner loses a lot of their investments – not only monetary, but in their pride as well.
It is painful to talk with people who have never defaulted in a debt to have now to go through the motion of losing their home but more so to have their pride shattered at the same time. Perhaps that is still the most painful part among the home short sale reasons.
There Are Many Winners Too
And here are my most important home short sale reasons:
One of the most import home short sale reasons that I see is that a short sale is much more preferable to its more know alternative: Foreclosure.
A house sold through short sale is much more likely to be cared for up to the day it is transferred to the new owner. It is more likely not to suffer much dilapidation. The neighborhood does not suffer with abandoned homes with uncared yards.
New home owners are now able to buy homes that originally would be out of their financial means.
The neighborhoods will be able to stabilize and, with time, home value will come back.
When the value comes back then everybody will again be in the wining side: The current home owners, the lenders and, eventually, those who lost their homes will have regained their financial strengths and buy a home again.
And those who are buying short sale homes now – will be on the podium… I do hope that you will be among those as well :-)
Home short sale reasons abound from financial and economical to social. I think that it is very appropriate that the government has weighted in with the HAFA short sale program to bring a bit of order to the system. Please click here to read more
JC Fagundes, Head Broker
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