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October 2008

ST GEORGE AREA SHORT SALES

Posted at 11:30 AM, Oct. 31, 2008

Short sales are a huge part of our market right now.  In fact, there are almost 300 properties that are being offered for sale through our MLS as "short sales".  In case you are not real clear on the definition of a short sale, it is when a lender agrees to allow an owner of a property to personally sell the property for less than is owed instead of the lender forclosing on the property.   Some of these sellers may be in default on their mortgage loans, but a majority of them bought at the top of the market or have taken equity out of the property through refinance.  Now these home owners are needing to sell the property because of divorce, job transfer, loss of income, etc and they are upside down, owing more than their homes are worth. 

Many lenders are asking sellers to sign a promissory note for all or part of the difference between the proceeds of the short sale and the debt obligation.   Another often overlooked aspect of a short sale is that the seller must count the amount forgiven by the lender as ordinary income on their taxes. 

Short sales take longer to close than bank owned properties because of the lengthy process the lenders have to go through to get price opinions or appraisals, and just because of the tremendous volume of short sales that are taking place nationally.  Because of the time element, many buyers are electing to make offers on bank owned properties or homes that are not in a distressed situation rather than have to wait up to 6 months to hear from the lender on a short sale.  

Short sales, while not good for sellers or lenders, are a great opportunity for investors, move-up buyers, and 2nd home buyers to take advantage of fantastic prices in this buyer's market.  I have seen homes sell for more than 50% less than their value of less than a year ago.  There is NO better time to buy real estate than right now!