Monday, May 30, 2011

Do You Need to Sell Short?

There are many alternatives to someone who owns a home and cannot make their payments.  One of the options is to request a short sale from the bank.  Some of the other options are bankruptcy, foreclosure, loan modification, refinance, deed in lieu and  more. Everyone's situation is different depending on all factors involved.  A personal residence has certain criteria involved, as does a property held for investment and furthermore, was the loan a purchase money loan or a refinance.  All these factors influence the situation and a solution is not cookie cutter for all.

Many people in the last 5-10 years find themselves owning a home that is now worth less than what they paid for it and possibly less than what is owned on the property.  Others people have loans that have adjusted to payment levels that are unaffordable.  This, coupled with a drop in equity, makes a refinance highly unlikely.  But there are solutions!

Credit is also a concern for many people.  Does a short sale have less negative impact on your FICO score than a foreclosure or a bankruptcy?  But what other factors also impact your credit score?  Late payments compounded month after month will have significant negative effect on your FICO score. This may negate the gravity of a short sale/foreclosure question.

What your home is worth is also a very important factor.   In Santa Clara County alone, there are sub-markets that are very healthy and prices are rising and there are sub-markets that are quite weak.  Your home's value will impact the decision whether to short sell, modify the loan or any of the other options discussed above.

An important step in this process is to sit down with an experienced Realtor to review all your options.  Even if you have received a Notice of Default or a Notice of Trustee Sale, there still may be time to enact a better solution.  Feel free to email  me or call anytime:

Mario Pinedo,CCIM
Keller Williams Realty
DRE 01118365
cell 415-269-6249
Serving buyers and seller since 1991.

For further articles on this topic, I have linked all the short sale articles here.

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