Real Estate “Short Sales” have been getting some attention in the news lately. But just what is a “Short Sale?”
Simply put, a short sale is the sale of a mortgaged property that results in the mortgage holder receiving less that what is owed to them.  The mortgage holder is “shorted” part of the mortgage balance.

In order to do a short sale, the bank or mortgage company must agree to it. But why would they agree to take less money?

The answer; banks don’t like owning, maintaining or selling houses.  It interferes with their main business of lending, managing and investing money.

If you find yourself in the position of having to sell your house and you don’t have the equity in your house or cash reserves to pay the mortgage off in full, a short sale may help you out.

Here’s how to go about doing a short sale, step by step:
1. Determine the current market value of your home.
2. Add up all of the selling costs you will need to pay.
3. Find out what the payoff amount is on your current loan(s).
4. Do the math, subtract the loan balance &  the selling costs from the market value.
5. Call your lender and ask for the “loss mitigation” department or a supervisor. Explain your situation to them.
6. Ask them what their procedures are for a short sale.  If they are willing to work with you, get all the forms and requirements and see if you can work out an agreement.  Be prepared to convince them your case deserves consideration. They will probably want a financial statement with all your bills and assets shown.  They may even want to see your household budget.  Don’t take it personally, it’s just business.
7. Sell the house. The bank will probably be involved with most of the contracts and offers.

The biggest mistake made by home owners in financial trouble is not getting in touch with their lender.  Almost all lenders would rather work things out with you than take back your home. Especially in today's market.

Questions? Comments?  Give us a call or email.  We love to talk real estate!

The old paradigm for real estate investment was to buy an “extra house” and use it as a rental for 30 years while the tenants paid for your house.  Previously, real estate investment was dominated by institutional investors such as banks, savings and loans, insurance companies, pension funds, and foreign investors that supplied private capital for both equity and mortgage investments. 

Investment

Many people are investors by choice; they believe that real estate is a good investment.  For all practical purposes, most investment real estate transactions fall into the category of passive activity.  One of the biggest challenges in real estate investing is determining the right strategy and getting the right real estate investment information for you and for the market that you are in.  The boomers are already migrating to warmer climates such as Arizona  and that will dramatically effect your real estate investments.  How long will interest rates stay low and how will that effect your investments.  Don’t make any decisions about where, when, or how much to invest without thinking about these five criteria for defining your investment strategy and DO NOT START INVESTING WITHOUT A STRATEGY.

Market

Market stability—reasonable return; historically favorable interest rates relative to inflation; a lack of deflation; legal protections for the investor; the leading economic market with the largest GDP—all support investment in property.  Nobody buys a property without first assuring himself that he is paying no more than market value.  Smart bargain purchasers make sure they are paying at least 20% less than market value and they cannot sell the property before they buy it in order to ascertain the market value.  One of the biggest challenges in real estate investing is determining the right strategy and getting the right real estate investment information for you and for the market that you are in.  There are literally dozens of different techniques being commonly used in today’s real estate market.

People have to understand that a real estate investment was never supposed to be a short term one, especially with closing costs and other expenses that relate to the transaction.  The most significant specific effect of this was that the appetite of households for real estate investment was not impaired and prices continued climbing.  To show that real estate investment was not as risky as other investments, we looked at interest rates charged by banks for various classes of investments.