A Short Sale May Be Your Best Way Out of Bad Real Estate Situation
While no one wants to lose their home, the trauma is made far worse by the destruction of your credit ratings that is attendant in the foreclosure process. If the lender will agree to accept the terms of a short sale that covers less than the complete amount still owed on the property, the recovery process will be much easier to achieve.
The IRS Debt Relief Act is set to expire in 2012. While there may be a reprieve in the form of an amendment, it is certain that short sales that are completed in this current calendar year will not trigger any income tax payment on the amount that a lender writes off in such a sale.
Some new programs are coming into play in which certain lenders offer incentives for a home owner to proceed with a short sale. These can include cash payments of as much as $35,000 to the homeowner.
While home owners may want to hold until the market recovers, there is no way of knowing for certain when this will happen. There are signs of recovery, strong signs in certain areas, including Santa Cruz and the Bay Area, but overall the market remains well below the peaks achieved between 2006 and 2008. Experts caution it could take years for housing to reach these levels in many places. It probably does not make much sense economically to wait when the market may continue to sink lower for another 2 years or more.
Hanging on to Huge Mortgages a Risky Bet
Most financial advisers would advise against paying large sums out on an investment that is not growing in value. That is basically the situation with underwater homes that are not gaining in value. There is no equity building up through such payments only an outflow of cash.
A short sale means that the lender will waive off any deficiencies that result from writing off the debt. This situation can also be applied to multi-unit buildings that are underwater. If such structures are producing negative income, the longer that you hold onto them, the more that you will lose.
Short Sales Can Help You Start Over
A short sale can allow a home owner to move on and start afresh. You will be able to begin rebuilding your credit and start saving so that when the time is right you will have the funds needed for a down payment on another home. It certainly does not mean that you will be doomed to forever be a renter.
As a certified Short Sale and Foreclosure Resource Agent, I am trained to help you work out the short sale detail. Lenders do not like losing money on a short sale, but since they almost always lose funds in a foreclosure, many of them are open to this sort of option. Damage to your credit will be considerably less than what will result from foreclosure. If you are interested discussing the possibility of short selling your Santa Cruz Home, CLICK HERE for a free consultation with Hyko Roppel, Short Sale and Foreclosure Resource Designated Realtor.