Sign 'O the Times

Here?s a question real estate agents are hearing lately??With so many short sales out there?does that mean the market is getting worse and should I be concerned about buying now verses later this year??

The answer, in a word, ?No.? Short sales certainly seem to be on the rise due to a variety of reasons: it can depend on:

• when someone bought their property (at the height of the market perhaps)
• the down payment
• drops in home prices and values
• did the owners take out a 2nd mortgage
• and of course just the overall economic crisis (i.e. rising unemployment)

All these factors are contributing to the increasing number of short sales. This creates many challenges for real estate agents and their clients. People want to get a handle on what is happening and how to navigate today?s real estate market.

What is a short sale?

A short sale is simply a transaction in which the lender (or lenders) agree to accept less than the mortgage amount owed by the homeowner. In some instances, the difference is forgiven by the lender, and in others, the homeowner must make arrangements with the lender to settle the remainder of the debt. Ouch!

Are short sales different from a foreclosure?

YES! Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses. A short sale can also be the best option for a homeowners who are ?upside down? on their mortgage because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.

Stay tuned! Next week I?ll discuss the specific challenges faced when dealing with a short sale and how to find the best real estate agent to work with to navigate the short sale process!

We would like to thank TheTruthAboutMortgage for sharing today’s photo via the Creative Commons license.