I love talk radio. I listen to news, political and business talk radio all the time. On Saturday (today), local talk radio shows are more prevalent as they take over the air-waves that are mostly made of nationally syndicated talk radio shows during the business week.
Today, As I was driving home from breakfast this morning, I was listening to financial show talk radio. Much of the conversation was about the Phoenix real estate market. Topics ranged from Phoenix real estate prices, mortgage lending, mounting Phoenix AZ foreclosures and Phoenix AZ short sales. 
Today, there was a guest speaker who was , by his own admission, an expert in helping struggling Phoenix AZ real estate owners with short sales. In fairness, there is no fee , out of pocket, for the home seller. Ultimately, he was a Phoenix AZ real estate agent who would list the property for sale with the hope of earning a commission upon a successful sale.
An honest service? Yes! A good service? Well maybe. Here’s why.
For the vast majority of homeowners selling short, there is little benefit. Yes, sellers avoid a foreclosure. However, in 99% of cases, the seller still has ruined credit. The seller still has to move out of the home. The seller gets no money from the sale. In fact, (in almost all cases ) the only beneficiaries to a short sales are the buyer who are usually getting a great deal and the real estate agents who earn a commissions.
There are exceptions to this rule, of course. If you are not behind on your mortgage and continue to pay until the home is successfully sold short, you can avoid late payments on your credit. You also avoid what some feel is a social stigma of a foreclosure. I personally do not see that as a problem. However, some people do.
If you are a homeowner and want to stay in your home, there is little value to a short sale. If you are suffering a financial hardship or have a mortgage with a large rate adjustment try a loan modification. A loan modification is an option for borrowers to stop foreclosure, stay in their home by offering a permanent change in one or more of the terms of a mortgagors loan which allows the loan to be reinstated and results in payment the mortgagor can afford.
If you are a Phoenix AZ real estate investor or a Scottsdale AZ real estate buyer, short sales provide a great opportunity to get teh deal of a lifetime. Make sure the short sale is approved with the bank. Otherwise, I recommend you look to bank owned real estate (REO) or lender owned properties.
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Copyright © James Wexler *There is no benefit to Short Sales !*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
There are good short sales occuring every day for a couple of reasons.
1. Even though the homeowner is getting a “hit” o their FICO score, it’s typically not nearly as much as a Foreclosure or Bankruptcy…and they can recover quicker.
2. Selling to an investor who is not owner-occupied can many times allow the homeowner to stay in the home as a renter. If they can’t afford the rent, then they probably shouldn’t have made the purchase in the first place. Many investors are trying to work with the homeowner and offer “cash for keys”, or other ways to assist if they need to move elsewhere.
So, in my opinion, a short sale, done right, can be a blessing in disguise for everyone involved.
As far as a loan modification is concerned. Why would a homeowner want to stay in a home that if equity ever returns, they will have little chance to take advantage of it…since the bank and/or Fed will take most if not all of it away for repayment anyway?
I have to agree with you, James, and disagree with the other Ken who commented on the post. Most short sales occur when the home owner can no longer afford t pay the mortgage either because of personal circumstances or because an ARM is about to adjust sending the mortgage payment through the proverbial roof.
Because there are so many short sales in the marketplace and because more banks and mortgage companies are swamped with all these loss mitigation requests, it is likely that a short sale will end up as a full blown foreclosure anyway.
I don’t agree that people can quickly recover from the destroyed credit that comes with a short sale. After all, if the mortgage is going by the wayside, it is possible that the credit cards and car loans are also in default. Furthermore, banks and mortgage companies will look strong and hard at the reasons a potential home buyer has bad credit. Not paying the mortgage is the kiss of death with or without a good “explanation letter.”
I could go on and on but let’s just say that short sales and walking away from your home is not something to be done without serious consideration and examination of every option.
It’s a fact that comparing stricly a foreclosure to a short sale, the homeowner has the opportunity to recover quicker because the FICO hit is not as severe. The short sale in itself isn’t what destroys their credit…
Personally I’ve not found too many bank reps who pay much attention to the severity of the “explanation letter”…they have a formula to follow that needs to be satisfied.
Also, because the home is being sold short, the payment will be less than the original mortgage payment…hence, the ability at times for some homeowners to be able to afford the rent payment to the investor and not afford the original payment, ARM or not. It’s not something that can happen all of the time, but you may be suprised how many times it can and does happen.
As an investor, it is not our goal to evict the homeowner if there is any way that they can afford the rent and stay in the home.
If the homeowner can’t afford the payments, doesn’t qualify for a loan mod., and doesn’t want a foreclosure, D-I-L, or bankruptcy on your credit record, what is the next option?