With the increasing number of short sales on the market, 2012 is being regarded by some as the year of the short sale. Short sales can be challenging, so the California Association of REALTORS® has provided the following information for members and their clients, along with numerous education tools to help agents gain an understanding of how best to help underwater homeowners avoid foreclosure.
In addition to consulting a knowledgeable and experienced real estate professional, Suzanne Yost, president of the Silicon Valley Association of REALTORS®, advises homeowners who are underwater to always consult a competent, professional real estate attorney and tax advisor, to help them decided which option is best for them. "I always tell my clients and our members that every homeowner's situation is different. Some owners may be better off choosing foreclosure over a short sale. It is always best to contact a lawyer and tax advisor, so they can help you decide what's best for you," said Yost.
Nevertheless, don't believe the following myths:
Myth #1: The homeowner must fall behind on mortgage payments in order to qualify for a short sale.
Debunked: Years ago this may have been true, but not in 2012.
Myth #2: Banks would rather foreclose on a property than approve a short sale.
Debunked: Many still believe this myth to be true, but more accurately, banks would prefer not to foreclose on a property due to the $50-70k it may cost the bank per transaction. Banks lose less money on a short sale than on a foreclosure.
Myth #3: Homeowners must be pre-approved by their lender to be eligible for a short sale.
Debunked: Absolutely not true. By and large, most lenders will consider short sale offers. However, each lender may have unique and specific processes to follow, from listing the home to the acceptance of a short sale. Bypassing any part of this process may result the sale not closing, so be sure to follow each lenders' processes closely.
Myth #4: Short sales never close.
Debunked: Obviously not true. In some areas of the U.S., nearly 50 percent of all closings are considered to be "distressed" properties, meaning REOs and short sales.
Myth #5: Following a short sale, the homeowner will be ineligible to purchase another property for the next 5-7 years.
Debunked: Not true. Using conventional lending guidelines, some consumers may obtain a Fannie Mae backed mortgage a short 24 months after the close of their short sale.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.