SaveMeFromForeclosure.com

The short sale, used primarily to stop foreclosure, is becoming a very popular field in real estate especially when interest rates are climbing.  Homeowners faced with the prospect of losing their home are turning more and more to this option. Short sales are also becoming more and more popular for real estate investors when buying a foreclosure just because of the huge discounts they offer.   

Short sales are negotiated by the seller directly with the lender, and they require the seller to provide information as to why they cannot find a way to make normal payments. Foreclosures are expected to increase nationally as many adjustable rate mortgages written during 2004 and 2005 reach their first-reset marks. Short sales are complex and likely to become more complex as lender deal with more and more of then in the coming months and years.  Many homeowners who took advantage of the inflated real estate prices to dig deeply into their home’s equity are now feeling the pinch. 

Lenders 

Lenders know that repossessing the home will cost them tens of thousands of dollars to maintain, refurbish, market and sell, with no guarantees that it will recoup the same amount as from a short sale.  Lenders want to see that the homeowner is not able to pay their bills and are in need of relief; short sales are a last resort option and are only necessary when faced with foreclosure or bankruptcy.   Lenders want to get rid of distressed properties as soon as possible, but they aren’t going to sell them for ridiculously low prices.   Sellers In a perfect situation sellers want to get as much for their homes as possible, and certainly don’t want to sell for less than market value, or sell for less than what they paid for it. This may quickly turn into a desperate situation however when unforeseen events transpire that create financial hardships. Job loss, long-term illness, or a dramatic rise in living expenses are just a few reasons homeowners suddenly find themselves with a cash flow problem. The fortunate seller who convinces their lender a short sale is the best way to solve this problem needs to be aware of one possible downside. Some lenders may claim whatever debt they’ve forgiven as a loss on their taxes and issue a 1099 form to the seller for the amount.  

Foreclosures 

Foreclosures are growing as expected and continue to increase nationally as many adjustable rate mortgages written during 2004 and 2005 reach their first reset marks.  Short sales are expected to increase proportionally as a direct result. Foreclosure practices, including pre-foreclosure short sale workouts, may differ from lender to lender, state to state, and in some cases, from county to county. 

Short sales have become fairly common practice in the real estate market these days and anyone who has completed one knows that you had better be prepared for rough riding trying to convince the lender you story is compelling enough for them to accept the lesser amount from the sale of the property. Armed with this information, you can decide whether short sales are an avenue worth exploring to avoid foreclosure.

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