We have an epidemic of foreclosures in America. Las Vegas, Nevada has been leading the pack in this grim statistic for over two years. I was at a real estate conference in Las Vegas last week and one of the panelists who consults on a committee working with the government made a comment which stunned me, 80%-85% of homes that are foreclosed across the nation were never listed on their local MLS (Multiple Listing Service) for as a short sale prior to being foreclosed!
Many sellers who are stuck underwater usually end up feeling powerless after fighting within the system, and eventually give up. Sellers need to know that there are still options open to them that involve little or no cost which may save them from a foreclosure or even bankruptcy. Your REALTOR assumes the burden of dealing with your bank on your behalf, but the results can offer a buyer a much quicker return to normalcy.
A short sale is when a homeowner sells a property for less than is owed on the current mortgage. Permission must be obtained from the seller’s lien holders to do so, but if successful, foreclose is avoided. The process is complex, but the results are far more favorable to a seller than foreclosure. Under short sale, the debt is usually settled in contrast to a foreclosure where the bank gets the home back, but the issue of the debt is not settled and the bank may have strong recourse available to them to pursue the unpaid debt depending on State law. You will have to consult with an attorney on these issues.
People who know they have to alter their loans to maintain their ownership engage in an activity known as a “workout” of their loan. Most major workout options consist of the following:
- Repayment of past due payments
- Forbearance (temporary suspension of payments)
- Loan modification
- Short sale
- Deed-in-Lieu of foreclosure. Investment homes are not eligible. Borrowers voluntarily give the property back to the bank. This is however, still a foreclosure.
With over 4 million foreclosure filings expected in 2010, alternatives to foreclosures are being encouraged by the Federal Government. In a market like Las Vegas, where plummeting property values have excluded many homes owners from curative programs such as Hope For Home Owners, the short sale is a viable option for many homeowners who know they cannot maintain the mortgage.
Sellers, go seek counseling on all the potential options up front. You want to move from one option to the next rather than try only one, stop to learn the next, and on an on. The problem with this strategy is you will run out of time to really mount a successful short sale effort. Don’t wait until two weeks before your home is due to be foreclosed and then try to take a stab at a short sale.
Going back to the original statistic that over three quarters of people who lose their home did not try to sell it demonstrates that the public is unaware or at the least uninformed that they can work with their bank to sell it, rather than have the bank simply come and take it!
Please contact Sena and Associates at 702.376.0088 for a free consultation on short sales and whether it may be a good option for you.
{ 6 comments… read them below or add one }
My mother in law specializes in short sales here in the Dallas market. It is nice to be able to help somebody from losing their house. It is just sad that some people dont even know that there is help out there for them if they need it!
Short sales can be tedious. However, it is well worth the effort of all parties involved to avoid foreclosure. I think some sellers are reluctant to investigate this option because of the perceived stigma associated with these transactions.
It really is a shame more people don’t know about this option.
You guys seem like the short sale experts! As agents who make our income based upon closed deals, it would be nice if the public was educated or even knew about what a short sale is.
I agree with Augusta. While short sales seem like a decent alternative, they can be very tedious and not as easy as many people think. Making sure that you have researched short sales and work together with an educated agent and banker is essential.
Exactly, they don’t know they can sell for less. Plus we have a true angel investor who will put in a low offer on many homes in good neighborhoods- for the express purpose of making the bank do the BPOS’s and tell us, the Realtor, what they would sell it for, very valuable listing information. Terry McDonald for Charlotte Real Estate