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M & A Tamene

FAQ #1 - How's The Market?

As a real estate professional the question I hear most often is How's the Market?

My response: "Well that depends". That depends on whether you are buying, selling, investing or renting.

Let's look at that question from the perspective of a homeowner looking to sell.

It is indeed rare that a homeowner who purchased within the last 7 years would see a profit from the sale of their property. There are two reasons for this: 1) Poorly planned mortgages strategies that include adjustable rate mortgages, negative amortization mortgages, pick a pay mortgages, & interest only type mortgages. Many of these loan programs were designed for the investor or homeowner who would not be holding on to a property for more than 3 - 5 years. It was never meant for the family looking to build the "American Dream of Homeownership". And 2) Erroneous property appraisal valuations.

Many people who have found themselves in an underwater situation could never really afford the home that was purchased in the first place.

According to the US Census, the average income for
Sacramento County in 2009 was right around $52,502 per year. How much house does that get? About $161,000.00.

Because of loose lending practices between 2004-2009 many average earners were purchasing home upwards of $400k. How does that happen?

Many of these average earners now face the fact that the amount they owe far exceeds the actual value of the property and that they can no longer afford to make the payments due to hardships such as loss of income, divorce, illness and the like.

A homeowner in this situation who wisely decides to do something about their negative position may decide to do what is called a "short sale".

So just what is a short sale? A short sale is a type of sale where the homeowner seeks to sell a property whose current value is less than the amount actually owe. (This type of sale requires the approval of the seller's lender).

What are benefits of a short sale to the homeowner? It is way to get from under the bondage of a poorly planned mortgage and although one's credit score may take a hit, a short sale is less damaging to one's credit than that of a foreclosure or bankruptcy. In California recent laws state that if lenders agree to a short sale they cannot pursue the seller for the deficiency on both the 1st and 2nd liens.

Room to breathe again. A few of my clients have told me, "I just want to be able to breathe again and not be
afraid to answer the phone or go to the mailbox".

Why would a lender agree to do a short sale? Two reasons; first, with all the negative press associated with the lending industry today, Its good PR for a lender to work with a homeowner who faces a distressing situation and secondly a short sale costs a lender a lot less than a foreclosure

Short sales are one of the ways a homeowner facing a distressing situation can get a fresh start without a foreclosure or bankruptcy and it seems short sales may even pay off in the long run. There have been recent reports of homeowners getting letters from their lenders offering them up to 35K to do a short sale.

One more good reason to consider a short sale; Time is running out on the The Mortgage Forgiveness Debt Relief Act and Debt Cancellation by the IRS.

If you would like to more information on short sales and the options they may afford, please contact Step One Real estate at 916-631-1909 or visit GetRidoftheHouse.com.

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- The Wild Wild World of Short Sales:

Short sales are anything but short. They require a lot of patience and commitment from everyone (buyer, seller, lenders and agents) but its worth the time and effort involved. That's why we celebrate all victories, small and great.

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