July 16th, 2009 2:29 PM

With the economic and real estate environment we currently are living in I have received a lot of questions lately from friends and clients about what to do with their houses when they are significantly upside down (30% or more).  I can not tell anyone exactly what to do but depending on the situation I have been able to at least walk them through their options.  Most people would prefer to avoid a foreclosure if at possible but they either can not afford their current home payment or are concerned it will take them forever to not be upside down again.

This conversation usually leads to a discussion about doing a short sale.  A short sale is a process where a realtor/real estate broker like myself lists your house for sale and negotiates with your lender to allow you to sell your house for fair market value and they forgive the difference of the loan.  This solution is not perfect but it allows you to get out of the home without foreclosing, and it allows you to do it in a manner where you are in control of the process.

Here are some basic answers to a few short sale questions I have ben asked:

 

-  Will my credit score be hurt?  Yes your score will be lowered but you can minimize the amount by continuing to make payments throughout the process.

 

-  Can I buy a house again?  Yes usually after 18-24 months you can buy another house. 

-  Are there tax consequences?  Talk to an accountant about this but the laws have temporarily changed so that most owner occupied homes can be short saled without tax consequences.

-  How long is the process?  The banks are improving with this process but the normal timeframe is 3-4 months after we submit an offer to the bank.

-  Who talks to my bank?  Every realtor handles this differently.  I use a professional negotiating company to work with your bank and I give them a percentage of my commission so it does not cost you any money.

-  What does it cost me to do a short sale?  It does not cost you any money.

-  Should I do a short sale?  This is a personal choice and only you can make it but you may want to at least consider this and gather additional information so you can make the best choice for you and your family.

If you have more questions please drop me an email (jim@amenrealestate.com).  I hope this blog has been helpful as I know this is a difficult time for everyone right now.

Jim

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