More than two years into the housing crisis, lenders are beginning to allow more troubled homeowners to unload their homes for less than they owe. The practice, known as a short sale, is gaining popularity as an alternative to foreclosure, but it remains a difficult and lengthy task to pull off because the lender bears the brunt of the loss.
Last year average time on the market for a short sale was almost 365 days. This year to-date it’s much faster and getting close to only 120 days.
Nationwide the number of short sales completed jumped 208 percent during the first quarter of this year compared with the same period in 2008, according to a report issued in June by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulate banks.
The types of homes that end up in short sales vary widely. At the beginning of the financial crisis, most of the homes were on the lower-priced end of the market, but now more higher-end homes are ending up in such deals.
Still, the short-sale process is notoriously slow and cumbersome. Unlike normal sales, the seller’s lender must approve the deal and is often suspicious of lowball offers, potentially dragging out the process for months. A real estate agent experienced with short sales can be helpful, but sellers should also prepare to provide documentation of a hardship that would persuade their lender to accept less than owed.
Most homeowners want to do the right thing. They do not want to be foreclosed on. A short sale may be the best option for this.
Forest Tardibuono is a CA DRE Broker with over 21 years experience in Real Estate and lending. His number is (707) 523-2099. See website @ www.sunpacmortgage.com.
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