"Short Sale" is going to be the buzzword of the new decade. In the first half of the new millennium we saw real estate behalf in the hundreds of millions come and we saw it go. We saw employees with 40k salaries production 100k in real estate; we saw an in-flux of previously-only-late-night real estate gurus buying prime-time slots in the middle of the Simpsons & La Law. I think I knew at least fifteen people who owned second homes in places that made no sense: five people who hated snow owned properties in Wyoming, Telluride, and Salt Lake; five people who hated the heat & sunshine owned properties smack in the desert here in Scottsdale, Arizona; three more people owned second homes two blocks down from where they lived, two people who couldn't swim owned waterfront asset and one man precisely forgot which city & state he had precisely bought his second home in!
Now here we are entering the new decade and boy how the world has changed. We now see foreclosures at an all time high. We see home values plummeting nationwide We see people who used to make six figures by June now scraping by at 30k a year if they're lucky; high unemployment rates and lower pay rates; even yesterday's Ceo's are now taking your lunch order.
Foreclosures are winning the race in the real estate notoriety division right now and right behind them is the elusive, slick "Short Sale". Although not everyone quite understands how a short sale works, or how it benefits the median consumer, or the differences in short sales by lender or state, practically everyone has probably heard the word by now. 2011 and beyond will be the "Decade of the Short Sale" and here are 10 reasons why:
Hafa agenda (Home Affordable Foreclosure Alternative) - The Hafa agenda (or as I have sometimes un-affectionately referred to it, the Hahahaha program) is the governments' idea of "helping". I admit that when the agenda works it is breathtaking and I'm here to tout it's benefits not it's shortcomings. If you qualify for the Hafa agenda you can be in a world of short sale heaven: Relocation costs paid to you (yes, get paid to do a short sale!), quick response time by your lender(s), and an agreement from your lender not to pursue you afterwards for any deficiency. A great program, with exquisite benefits, if you qualify. Not everyone does but this should be your first ask to your real estate agent: "Do you know what the Hafa agenda is and do you think I'll qualify?"
Loan Modification Failures - Millions were promised help and favorable loan modification terms, practically as many million were let down. The foreseen, stat is that of the lucky ones who did qualify for a loan modification, fifty percent of them will fail the agenda in the first six months. This any way will work nicely in the favor of the short sale - with so many people not qualifying for a loan modification but still willing to work with their lenders this will mean an increase in the whole of people willing to short sell their properties and will hopefully in turn motivate the lenders to staff up their short sale department. Maybe they can spend a Tuesday intelligent desks from the loan modification floor to the short sale floor...that's my suggestion, take it or leave it.
Realtor Agent Experts - Although this one can go both ways, I'm inevitable that it will benefit the consumer. When short sales first became prevalent most real estate agents shied away from them; afraid of the unknown, afraid of the lenders, afraid of the dreaded "short sale". Now that they have become such a huge part of the marketplace agents have either had to leave real estate altogether or have been forced to learn about the process. Many agents have taken it upon themselves to become true specialists in this field and have taken multiple classes, found lots of clients with upside-down mortgages, and have now negotiated many short sales and can be thought about an expert. Some agents any way have nodded on and off straight through a forty-five puny intro course, printed out a certificate from their I-Phone, and have taken to the streets as "Shirley Short Sale", ready to blindly lead the blind off the cliff. Find yourself a true specialist with experience, knowledge, and a track article and avoid the Shirley Short Sale Agents at all costs.
Lender Changes - The lenders, banks, servicers, investors, etc. Have all learned that these types of transactions are not going away. Like 'em, love 'em, or hate 'em, these entities have been forced to deal with them by the thousands or even hundreds of thousands. One bank we deal with frequently used to have four people in their short sale division back in the mid 2000's. Yes, four. They now employ over 3,000. Although the lenders will continue to be overwhelmed and overworked they at least have some sort of structure and departments in place to at least attempt to deal with your needs. There's hope that when you sit on hold for two hours, get transferred six times, and have eight people give you ten distinct answers to the same ask that at least half of those people will work in the division as opposed to pretending they have no idea what you're talking about!
Neighbors Have Taken a "Chill Pill" - Neighbors were a big qoute in the beginning of this era. When everyone on the block paid 0,000 for their homes the assumption was no one wanted to be that guy who sold for 0,000. people short selling their home didn't ever want their neighbor to know and avoided taste with them at all costs. Leave the house a bit earlier than normal, come home at dark, don't respond the door. Lawns everywhere went overgrown because people didn't want to occasion cutting their grass and having their neighbor projection them! In 2011 it will be distinct - for many people this is not only a smart financial decision (and who doesn't like to brag to the neighbors/family/associates about smart financial choices) but now after a few years in this market the stigma of being upside down is gone. The decline is housing values is so pervasive that even those "responsible" buyers who put 20% down are way underwater. Here in the local Arizona, Phoenix - Scottsdale real estate market home values have declined 50%. So unless your neighbors bought before the height of the market or put more than that fifty percent down then they too are in the same boat as you.
Real Estate market Conditions - The real estate market will always exist and will be distinct nationally, regionally, locally. Underwater mortgage numbers may be higher in California, Nevada, and here in Arizona than in Connecticut, Kentucky, or Kansas but the national real estate market will affect us all. The national real estate market is not favoring very well and the outlook into at least 2011 is not very bright. We hope for the best but with the current economy in its poor state, high unemployment rates, and lack of buyer reliance home values will continue to sputter. "Appreciation" is a word of the past and a word of the possibly-distant-future, not a word of the present. Some areas will thrive more than others and we all hope for a sooner-than-later recovery but the facts remain that a turnaround in the national real estate economy is going to take a while. In that time short sales and foreclosures will dominate many local & regional markets which will in turn affect the national real estate market.
Taxes - The Mortgage Debt Relief Act of 2007 brought about tax relief to those doing a short sale or a foreclosure on their original residence. The Economic Stabilization Act of 2008 extended this tax relief to the year 2012. Some restrictions apply, check with your Cpa to be sure you qualify, but the majority of people who do a short sale on a original home straight through 2012 may be absolved of all tax liability. Hopefully as 2012 draws to a close we'll see this extended but until then this window is only open for a definite duration of time and that time is now!
Attorneys Versed in Short Sales & Foreclosures - Along with real estate agents, many attorneys are now well educated in the real estate & foreclosure laws of their practicing states. Many attorneys now offer free or discounted consultations, teach seminars, and some even help Realtors negotiate these types of deals. Attorneys are no longer just those guys in high-priced suits with the goofy commercials every 5 minutes, they've become mainstream, personable, and affordable! Just like agents, not all attorneys know what they're doing so be sure to ask around, get referrals from trusted sources, and don't be afraid to get a second or third opinion.
Mainstream & Morality - professional real estate agents & attorneys do not coerce, entice, or force people to short sell their home. This is a company decision made by a client as to what's in their best interest. Some people need to move because of financial hardship. Some people are forced to relocate and can't sell their home otherwise. Others have unexpected curative bills, family issues like separation or separation, or were tricked into some ridiculous interest rate that has now doubled or tripled. These people can put food on the table or they can pay their mortgage. What's it gonna be? Well, if it's the former then there are only a few options and foreclosure and short sale are two of them. people have become more knowledgeable of the process and as the idea and conception becomes less foreign the median homeowner can make a much more informed decision. Foreclosures ordinarily benefit no one while a selling your home can benefit all parties involved, especially the lenders. Don't believe that? Call your lender and tell them you are planning to stop paying your payments and I'll bet somewhere along the way they tell you to attempt a short sale. In most cases, anything but a foreclosure!
A occasion To Move On - This is not the end, it's a new beginning! Sticking your head in the sand and waiting for man to come along and dig you out is not a good idea. Maybe a short sale isn't the answer; maybe it's a loan modification. Maybe you turn your home into a rental. Or maybe a foreclosure may be best. Maybe you even make the decision to stop watching the news, stop reading the paper, and stop reading these "Top 10 Reason" lists and you decree to stick it out for the long haul. No matter what you decree follow these steps and you can succeed: respond the situation you are in, witness all your options, discuss your situation with the right professionals, make an informed decision, stick to it, have a backup plan just in case, and go out and live your life without stress or burden. A wiser man than me once said; "I have been given a finite whole of heartbeats and I don't plan on wasting even one".
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