A New Short Sale Versus a Foreclosure Dilemma
December 17, 2009
An article this morning in the Wall Street Journal was entitled "Debtor's Dilemma: Pay the Mortgage or Walk Away." The article dealt with homeowners whose mortgages exceed the present market value of their property. It offered six questions homeowners should ask themselves before they stop making payments on their mortgages. However, what seems also to be a dilemma in this real estate market is the question of offering the property as a "short sale/subject to lender approval" or just letting the foreclosure process run its course.
From a homeowner's point of view, the financial loss may be the same.
But, in the world of real estate transactions, there is another perspective of the short sale vs. foreclosure dilemma. Both can be very lengthy processes. The next dilemma is the question of what price to put on the property. Since, it seems that the lender will not negotiate until an offer is submitted, comparable properties are the best guide. Some agents are recommending hugely discounted listing prices for short sales based on the hugely discounted prices lenders have become willing to accept at foreclosure auctions. Thinking that a short sale offer might be more readily accepted by the lender if it is not so far below what is owed, sellers and agents select a price that looks to be in keeping with comparable sales. Truly a dilemma!
If the goal is to keep a foreclosure off of one's credit report, a short sale can be a good choice. The homeowner can request that the debt be reported as "satisfied" and the dings on one's credit can be lessened.
Short sale transactions have gotten the reputation of being tediously long. These short sales can be dilemmas for buyers as well as sellers. If lenders and/or their servicers would act, folks could get out from under their debt, lenders could rid themselves of non-performing assets and buyers would be purchasing a property at the new market value. Let's hope that the negative publicity that lenders have received concerning their responses to short sale offers has the effect of changing the way that lenders respond. If a normal sixty time frame from offer to closing could be achieved, some of the dilemma about choosing a short sale vs. a foreclosure could disappear.
An article this morning in the Wall Street Journal was entitled "Debtor's Dilemma: Pay the Mortgage or Walk Away." The article dealt with homeowners whose mortgages exceed the present market value of their property. It offered six questions homeowners should ask themselves before they stop making payments on their mortgages. However, what seems also to be a dilemma in this real estate market is the question of offering the property as a "short sale/subject to lender approval" or just letting the foreclosure process run its course.
From a homeowner's point of view, the financial loss may be the same.
But, in the world of real estate transactions, there is another perspective of the short sale vs. foreclosure dilemma. Both can be very lengthy processes. The next dilemma is the question of what price to put on the property. Since, it seems that the lender will not negotiate until an offer is submitted, comparable properties are the best guide. Some agents are recommending hugely discounted listing prices for short sales based on the hugely discounted prices lenders have become willing to accept at foreclosure auctions. Thinking that a short sale offer might be more readily accepted by the lender if it is not so far below what is owed, sellers and agents select a price that looks to be in keeping with comparable sales. Truly a dilemma!
If the goal is to keep a foreclosure off of one's credit report, a short sale can be a good choice. The homeowner can request that the debt be reported as "satisfied" and the dings on one's credit can be lessened.
Short sale transactions have gotten the reputation of being tediously long. These short sales can be dilemmas for buyers as well as sellers. If lenders and/or their servicers would act, folks could get out from under their debt, lenders could rid themselves of non-performing assets and buyers would be purchasing a property at the new market value. Let's hope that the negative publicity that lenders have received concerning their responses to short sale offers has the effect of changing the way that lenders respond. If a normal sixty time frame from offer to closing could be achieved, some of the dilemma about choosing a short sale vs. a foreclosure could disappear.
posted by shirley harry at 8:59 AM
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