Why Short Sale?

Many California home owners short sell their home for the following reasons:

You have more control over the process and more options than if you just walk away from the house.
Sellers of shorts sales can usually stay in their house much longer
It is one way to avoid foreclosure and is less damaging to your credit rating.
Those who short sale can generally buy another house much sooner than those who foreclose.
The transition between you and the next owner is more discreet.

The following video describes how many feel about the current housing market. Why Short Sale With Us? | How Short Sales Work Video Summary:

Everywhere you went you heard: “Own a home, own a home, own a home. Be a home owner!” In the early part of the decade if you could fog a mirror you could get a mortgage. Everybody was doing it; everybody is moving up, property values going up.

That dream is now a nightmare for many of the 75 million Americans who own a home. So the housing market report card is ugly, in the past two years the housing market has lost an estimated 5 trillion dollars as 59 million homes had declined in value. Nearly 1 in 4 homeowners, 10.7 million households nationwide are underwater on their mortgages they owe more than their home is now worth. The housing market is so bad in California that a bank demolished 16 nearly completed homes because it was cheaper to knock them down than to finish them. Home building across the country is almost none existent. In 2005, two million housing unit were built in this country, last year it dropped to nearly a quarter of that.

And then there’s foreclosure, nationwide nearly 6 million households had been taken back by the bank in just the past three years pushing down home values and leaving some neighborhood looking like war zones. And that’s the problem, people are still losing their homes preventing a housing market recovery.

All of those risky loans banks gave to homeowners are still wreaking havoc. Jessica and Aaron Jenkins got in way over their heads when they bought their 5 bedroom dream home in Corona California, it cost them $700,000. They paid $2800 a month on their interest only loan, never touching the principal. But this year their loan would reset adding $1100 to their monthly payment. In the next two years nearly 361,000 loans will reset nationwide increasing mortgage payments by an average of 1000 dollars per month. That is why a record of 3 million more foreclosures are expected in 2010. Today the number one cause of foreclosure is unemployment. 15.3 Americans are now out of work. Twenty-seven year old C.J. Mueller bought a house in Phoenix for $210,000, but then he lost his job he tried to get his bank to modify his loan instead he just got his foreclosure notice. President Obama mortgage modification program aims to permanently modify 3-4 million loans by 2012, so far they fixed 66,000. They want banks to speed up the process. Unfortunately its lip service and little action and to the administration gets tough on lenders we’re still gonna see huge amount of foreclosures. Banks say they are simply overwhelmed and some people are beyond help. And the solution for many is to just walk away. Some experts say it may be better to cut your losses and ruin your credit in a short term than to poor more money into a bad investment.

To keep people in their homes credit counselor Michelle Johnson said banks should permanently convert risky loans into 30 year fix mortgages for those who can afford the payments. Some mortgage firms and a few banks are going further actually reducing the principal on loans. However, the housing market also needs buyers. John and Diana Juniors just bought a four bedroom home in Las Vegas, thanks to the $8,000 Federal Tax Credit for first time home buyers. That incentive has spiked home sales a 4.9 percent in the past year, however the tax credit expires in April 2010 and experts say shell shocked banks need to start lending again. Yet home buyers are much more focused on cost, they’re heeding the warning to never spend more 31 percent of pretax pay on housing. For a family making $75,000, that means not spending more than $1900 per month. Builders are responding with smaller and more affordable homes. Pulte Homes scraped their three story 3300 square foot home, now they sell a two story 2000 square foot home, chopping the price tag in half from $400,000 to $200,000. In Phoenix Philip Beer is buying foreclosed homes giving them a major face lift and energy saving upgrades to make them affordable. In this home he lowered the annual utility bill from $2000 to just $400. As for the Jenkins, they learned that it was unnecessary. It wasn’t worth it. A feeling shared by millions of Americans….now living with regret.

Before considering a short sale you should explore your options. Visit the Making Home Affordable Eligibility site to learn about government loan modification programs.

What are Foreclosures and Short Sales?

Foreclosure is the legal process in which mortgaged property is sold to pay the loan of the defaulting borrower. Tragically, the homeowners lose their home. Short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property. In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor, thereby avoiding a foreclosure (trustee sale) for the homeowner. We Can Help! Facing foreclosure? Call or email to find out how we may be able to help you avoid foreclosure through a short sale. We have successfully negotiated many short sales with various banks’ loss mitigation departments. Potential Seller Benefits of a Short Sale

Seller can continue to live in the house during the short sale.
Short sales may have less of an impact on sellers credit as compared to a foreclosure.
Lenders may stop reporting missed payments to credit agencies.
Short sales provide sellers more time to assess their situation and act accordingly.
Sellers may be eligible to buy another home sooner than if they foreclosed.
Short sales are considered a form of a “work out.” Foreclosure is abandoning one’s home.