Let me very, very briefly explain the differences; the practical differences between a short sale and a foreclosure from various points of view. This information comes from several years of practical experience, seminars with title companies and bank executives, and processing short sales. My clients repeatedly tell me that what they really want most is the truth. Well, sometimes the truth is hard to hear, but hear it goes. Oh yea. I know we're a bit litigious so here's my disclaimer... clearly expressed: If you have a tax question, as a CPA. I'm a Realtor. I know home values, marketing strategies, and C.A.R. contracts. I can tell you what your home is worth, and I'm usually right...but I'm not a CPA or an attorney, so when I'm stating my opinion, it's my opinion.
From a home owner's point of view:
Foreclosure:
MANY, many people find or have found themselves in a situation that is horrible to be in; unable to make their mortgage payments. It really is one of the most stressful circumstances I've ever experienced or witnessed as a professional. What the government doesn't see, and the banks don't care about is the devastation that the mortgage crisis has left in it's wake. The fallout from these stresses causes problems far beyond and more serious than a poor credit score. I've seen couples and families fall apart, people lose self respect, resort to drugs and/or alcohol to escape the inescapable. I've watched business owners walk away from their homes as well as their businesses because they're just spent! "No matter how hard I work, there's no way out. Screw it!" Homeowners were giving the proverbial finger to the banks. Sadly, even with help and information out there, with laws in place to protect our citizens, some still feel it's easier to simply bury their heads in the sand and deal with the consequences as they come. The truth is, foreclosing is virtually never the best option. There are VERY few, if any benefits to foreclosing. "But my uncle's cousin Jethro stayed in his house for 7 years without making a payment!" Good for him! That never happened and ship has sailed. Banks work much more swiftly now!
When the bubble burst, banks did not have the infrastructure to handle the volume of defaults that were being thrown at them. Not long after that (and trillions of dollars in bail-out money) banks "merged" and again couldn't handle the load. Now how long can someone stay in home before being "thrown out"? Each circumstance is different. Could be 90 days after your first missed payment that an auction date is scheduled. After that, you've got 21 days. Could be more, but when it comes to that pesky little question like, "Where are my loved ones and I going to live?" I tend to lean toward the conservative side. If you miss a payment, your in default. If you miss 3 in a row, your property can go to Trustee Sale (auction). At that point it can be purchased on the court house steps. Then...it is simply somebody else's house!
What about a short sale?
A short sale, although it is a bit more work, is 180% from a foreclosure. It means that you're going to work with the bank; to provide information; to ask "how high" when they say jump! It means that you're going to be a part of the solution. Later, I'll discuss the benefits of your cooperation and how that's seen from others' points of view:
- From a lender's point of view
- From a landlord/employer's point of view
- From a home buyer's point of view
In a short sale, you are almost un-qualifying for your mortgage. Some circumstance (hardship) has occurred and we simply want to share that with the bank; asking them to allow us to sell you (their) property for a price "SHORT" of what's owed. You may have a financial hardship (job loss, curtailment of income, etc) or it may be physical (job relocation or transfer, change in family circumstances, change in healthy, etc.) After you provide the needed documents to the bank and secure an offer on the property, the bank determines if they will accept the offer. (it is paramount that you work with an effective Realtor in the process) then your house is sold.
Looking at the bullet list above, imagine how the 'behavior' of foreclosing versus the "behavior" of working together with a bank to find a solution would be received by each of them.
From a future lender's point of view:
Foreclosure - This new loan applicant already walked away once! What's going to prevent them from doing that again?
Short Sale - It appears as though this applicant has gone through quite a bit. That's unfortunate. Where do they stand now?
From a prospective landlord and/or employer's point of view:
Foreclosure - They gave up. When things got hard, they gave up rather than trying to work toward a solution.
Short Sale - Seems like today almost everybody has lost a home. That's unfortunate.
From someone who may be looking to buy your home:
Foreclosure - So this house was foreclosed? I wonder how well it was cared for? I wonder if it was maintained the way it was supposed to be?
Short Sale - Short sale? They're never short! They take forever, but we may be able to close this one at a price a little below market value. PLUS...if our offer is accepted and we have to wait 3 or 4 months, in this market it's only going to be worth more!
Now I KNOW that people were foreclosed on when the debt relief act and the senate bills weren't in place. That's a real shame. I know people that were misguided as well. I know personally that when banks weren't equipped to handle the volume of defaults...they simply foreclosed without even processing pending short sales. Ok...yea...Bank of America REALLY dropped the ball a couple years back. That said, they've gone from zero to hero. Again, the infrastructure is there!
If you have questions or a unique circumstance to share, please give me a ring. I haven't seen it all; nobody has. But I've seen most of it, and continue to work through these deals smoothly and effectively as my clients have stated.
I'll leave you with this Taste of Wisdom,
" Set your goals so big that you cannot achieve them until you grow into someone who can!"
~ Unknown
Until next time, and thank you in advance for remembering me when the topic of real estate arises.
Email me at andy.blasquez@gmail.com
Click here to reach Macky Hensel.
Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook
Finally, please comment or ask questions. Other readers may be wondering the same thing. I love the feedback, critical or otherwise, and love the interaction: I love this job.
Click here to reach Macky Hensel.
Please Follow me on Twitter and Re-Tweet these blogs.
Please Add me as a friend on Facebook
Finally, please comment or ask questions. Other readers may be wondering the same thing. I love the feedback, critical or otherwise, and love the interaction: I love this job.
Thank you always for your support.
No comments:
Post a Comment