When a homeowner purchased a house years ago, short sales were not in a prominent place in the news. The short sales: housing market came into prominence after 2008 when the distressed economy and erroneous lending practices began to have an effect on the real estate industry. A short sale is defined as one in which the owner sells the house for an amount that is insufficient to satisfy his mortgage balance.
A home is the individual’s biggest investment in most cases. When he or she ends up with less money and owing the bank a balance, it is unexpected to say the least. We have experienced a time when short sales were advantageous compared to foreclosure. It is unthinkable to lose the biggest asset you have, much less lose it, and still have to pay for it.
Currently, short sales compose up to 24 percent of all housing sales in the United States during the month of January. Foreclosures made up 19.7 percent. Those percentages were different in 2011 when 16.3 percent were short sales and 24.9 percent foreclosures. Short sales have the advantage of being more easily facilitated and closing more rapidly.
A recent proposal by the Federal Housing Finance Agency hopes to streamline the procedure required to facilitate a short sale. It saves property taxes and legal services for the seller. There are many additional costs associated with a foreclosure. You are going to absorb losses in the final selling price. However, it’s still less than in a foreclosure.
Short sales are, therefore, now a preferable option. These are alleged to be “good for the market” although not good for the disgruntled homeowner. Oh for the good old days when real estate was considered the only safe investment. Now, the home can be located in one of the previously desirable areas, and still fall victim to the short sales: housing market dilemma.