I BELIEVE that 2013 is going to be the “year of the short sale.” And THAT is a good thing! As I have always mentioned in the past, lenders will be more eager to help homeowners towards the fourth quarter of the game. I seriously believe that this is the fourth quarter of cleaning up all these mess that was created due to the creative financing and loose guidelines the lenders allowed homeowners to close their home loans with. Now, you will know quickly if you are able to do a loan modification or your lender will suggest for you to do a short sale and allow you to leave with between $3,000-5,000 in relocation assistance.
Once you have realized that you’re upside down property is not worth keeping, you will then realize that a huge burden has been lifted from your shoulders and that you can move on. There is no practical sense to keep on throwing money into a fire pit. This might be your last chance to consider this option if you absolutely have no other alternative.
Best decisions are made with practicality and sensible financial calculation, a home use to be a house that you had just bought and turned into a home. If this home becomes a burden and a bundle of debt to you, it’s time to make it into a lost business opportunity and cut your losses. You can always get back on your feet and start over in a couple of years. It’s a great way to really cut your losses and never look back. I have been discussing new buying options with the homeowners that have short sale their homes in 2008 & 2009; they are actually able to buy now with the short sale being three years ago.
For those who can actually afford these upside down mortgages and want to really keep their homes. You have to make sure you are looking at long-term recovery running 5-possibly 8 years depending on your location.
The government fiscal cliff issues are swept away for now, so you will start to maybe hear some news about the mortgage mess that is still in the air.
Why you should consider to Short Sale in 2013 if everything else you tried have failed:
1. The Lenders. Lenders have embraced short sales quite simply because they make more money in most cases than they would if that same home went through foreclosure. Homes sell at higher prices to the public due to low inventory rather than through foreclosure auctions, which consist mostly of investors. Therefore, most banks and lenders have streamlined their paperwork and procedures so that the whole short sale process is done more efficiently and with less people. Because of this you can expect to see a lot less REO (real estate – or bank – owned) properties on the market in 2013. For lenders/banks this is a good thing to share with your stockholders.
2. The extension of the Mortgage Debt Relief Act of 2007. Yes, it survived the “cliff,” at the last minute. This relieves most homeowners from having to pay taxes on the amount between the mortgage balance and what the home was “short sold” for. This gives homeowners ONE MORE YEAR to make the best of a bad situation, and I believe many will take advantage of it. I DO NOT think that it will be extended after this year. As you are doing your taxes this year, it is a good time to talk this over with your tax advisor. A short sale may be the best option you have right now.
3. Real Estate Agents. As short sales began to steadily increase, real estate agents have had to become well versed in the process for both sides: the listing side and the buyers’ side. The short sale process includes more paperwork, and the knowledge of the lenders criteria and procedures. This is the extra step when you do a short sale on your home, and it is a crucial one. For that reason I always recommend that you work with a FULL TIME real estate agent. You do get what you pay for.
4. The Public Stigma. Let’s face it, we all know one or more people who have either lost their home to foreclosure or sold their home through a short sale. While it used to be one of those deep dark secrets that only the family knows about, that isn’t the case anymore. Unfortunately, short sales and foreclosures have become of a fact of life for many people. There is no shame and guilt that was once associated with this scenario, and that’s how it should be. Here’s how I look at it: we as a nation got a chance to own a piece of the pie, we as a nation have suffered from the real estate bubble/bust, and we as a nation are digging our way out. Sometimes wiping the slate clean through a short sale truly is the best solution … and that’s ok. Now, we have become smarter and wiser due to this and with our next move we surely succeed.
Those are my reasons for thinking that 2013 will be the year of the short sale. If you have any questions and/or concerns call Ken Go at (562) 697-7028 or (562) 508-7048.
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Thanks for your inquiries and comments, please call Ken Go of 1st Innovative Finance Group 26 years of experience helping homebuyers and borrowers live up to their dreams of a California Real Estate Pie. Call Ken at (800) 508-7048 or write to [email protected].