S hort sale homes are becoming quite popular in Phoenix, Arizona in this day and age. With a troubled economy and an incredibly weak housing market, short sale homes have flooded the real estate market. Let’s examine short sale homes from the perspective of all three parties involved, the home owner, the buyer, and the lender that holds the mortgage note.
First and foremost, what are short sale homes?
Short sale homes are better understood if you know what a short sale is. A short sale is when a home owner sells their house for less than the amount needed to pay off the existing mortgage. Short sale homes usually have an “upside down” mortgage, meaning that the house is worth less than the mortgage. As an example, consider Home Owner A in Phoenix, AZ. Home owner G, bought a $150k home for $150k. He took out a mortgage for $125k. However, because of the poor housing market, the home is not worth only $85k. Home Owner A doesn’t like the fact that his mortgage is upside down and he is paying for on a $125k mortgage for a house that only has a value of $85k, so he decides to short sell his house. This situation has created the niche market full of short sale homes.
-The owner of the home has the opportunity to sell his home that is not worth as much as his mortgage anymore. With short sale homes, the bank might forgive the remainder of the debt (you’re asking why would they do that? Right?) Also, by selling the home and staying out of foreclosure with short sale homes, the home owners can keep restore good credit in a short time and buy a new house in a few years or sooner.
-For lenders that approve of short sale homes, it is not the best situation, but, it is a better situation than if they had to go to foreclose with all of the homes that have defaulting mortgages. So, lenders, in the majority of cases, approve short sale homes. Sometimes they will forgive the remaining debt on the mortgage to avoid taking the home over and having to foreclosure sale it. Remember that banks are in the money business. They do not want to own real estate EVER. Every home foreclose costs them thousands of dollars in legal fees and processing. Also important to consider, the foreclosed home will get a smaller offer price at a foreclosure auction than it would when they allow short sale homes.
-For the buyer, short sale homes are a great opportunity to get a property that is in relatively good condition for a steal of a price. Keep in mind that the home owner has not abandoned the home in poor condition as they may in foreclosure.
Short sale homes give all parties, the buyer, the seller, and the lender the best outcome from a bad situation.
For more information check out http://short-sale-arizona.info/short-sale-arizona-help/
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