Short Sales

As financial counselors we often see people who have, among their challenges, a house that they are upside down in. Many times this calls for a short sale. But what exactly is a short sale? This is a question frequently asked in these difficult times. Let me share the definition according to the Northwest Multiple Listing:

"A 'Short Sale' is a sale that does not produce sufficient funds to cover the existing monetary encumbrances against the Property, closing costs, real estate commissions, and other financial requirements of closing. Seller’s creditor(s) are those third parties who have an interest in the Property in the form of a deed of trust, some other security, or a lien (e.g. tax lien). In a short sale, Seller will usually need to get the consent of Seller’s creditor(s) in order for the sale to close. This is because Seller’s creditor(s) may have to agree to accept less than the outstanding amount of Seller’s debt that is owed to the creditor(s)."

Dealing with short sales seems to be the norm these days. As a real estate broker actively representing both buyers and sellers, I would estimate up to 60% of transactions are dealing with some kind of "short sale".

What are the pros and cons of a short sale?

Pros:

• as a seller you are in control of the sale of your home, unlike a foreclosure where the bank or lien holder is in the driver's seat. Keep this in mind though - if you are not priced aggressively enough to get an offer on your home, there won't be a short sale!
• Typically a short sale is less of a "ding" on your credit score.
• Often times the seller will be able to get the lien holder to "forgive" the deficiency. Keep in mind, however, that you will be taxed on this "forgiven" amount, so make sure you consult your tax advisor regarding this.
• As a buyer, there's lots of opportunity for deals with short sales, if you have patience to wait!

Cons:

• As a seller there is no guarantee of a sale, even if you have an offer. The banks or lien holder(s) have the final say.
• As a seller, you will typically need to be in arrears on your payments for the lien holder(s) to consider a short sale.
• As a buyer will need to be willing to be patient, and there's no guarantee of a sale.

These are just some of the pros and cons of short sales. For more specific information regarding your personal situation, feel free to give me a call. I'm not only a Certified Financial Counselor, I'm also a Real Estate Broker with a great deal of experience in working with short sales.

Give us call, we would like the opportunity to help you in this difficult time. There is hope, there is a way out!

Joshua Koffler, Nine36 Financial (936 Financial)

December Real Estate Stats for Snohomish County

For those of you that live in Snohomish County, here's the December real estate statistics:

Snohomish County
Stat Comparison: December/November/October/September
Residential Home Sales: 288/241/371/437
Residential Homes Pending Sale: 465*/459/470/556
Active Residential Listings : 4,049/5,019/5,305/5,565
*202 went pending in the month of December.

I won’t give any predictions for the 2009 real estate market but I will say that families will always have a need for housing! We are still seeing a very strong buyer’s market with low interest rates, ample inventory and motivated sellers. Keep in mind that real estate is a long term investment! On the listing side I’m seeing an increase of “distressed homes” coming on the market and daily price drops, as more and more people are facing the possibility of losing their home. If you find yourself or someone you know in this situation, understand that you have options. I can help you negotiate with the bank for a loan modification, or facilitate a “short sale” to avoid foreclosure. Don’t hesitate to call me today to get the help you need. I’ll put my knowledge and experience to work for you!

Interest rates have dropped to 5.325% with no points.

Joshua Koffler, Nine36 Financial (936 Financial)