A short sale is when a homeowner owes more than what the house can sell for.  If a homeowner has a loan of $450,000 and the value of the home is now only $380,000, the lender on a short sale will pay for the deficiency of $70,000 plus the cost of selling the home.  Why will the lenders take this loss?  Because they do not want to take back the property in  foreclosure.  Lenders pay an additional $50,000 to $60,000 for every home that goes to foreclosure after they pay for their holding cost, attorney’s fees, get the home cleaned out and maintained, change the locks and keep the home in their inventory longer before the home sells as an REO (Real Estate Owned).  In some cases, there may be 2 or more loans against the property. When a property goes to foreclosure, it creates a 9% decline in property values in the neighborhood.  If we can all be more proactive in informing our friends that they have better options than foreclosure, we would be helping the economy.

A  homeowner who loses a home to foreclosure becomes ineligible to get a Fannie Mae backed loan for a period of 5 years, whereas a homeowner who choses to do a short sale will be eligible only after 2 years.  Now that Fannie Mae and Fredie Mac loans make up for a big percentage of loans being written, it is best to avoid that negative consequence.

Additionally, when employers do credit check on applicants or current employees, a foreclosure can have a very detrimental effect on the employee and in some cases, when employees hold  sensitive position could be a ground for reassignment or termination.  A short sale is not reported on a credit history and therefore is not a challenge to employment.  “The loan is typically reported as “paid in full, settled”.

Ask me about short sales if you want more information.

Elizabeth M. Eugenio, (909) 376-8615

Email:  Elizabeth@HomesByLiz.com, Website: www.HomesByLiz.com

Certified Distressed Property Expert (CDPE),  Certified Residential Specialist (CRS), Graduate Realtor Institute (GRI).

Why Avoid Foreclosure? is a post from: Chino Hills Real Estate Resource Center

Nowadays, we are bombarded by the media with a lot of negative information about the real estate market.  Due to this,  a lot of buyers feel they should wait for prices to come down more before buying their home inspite of the fact that it is a buyer’s market.  But do we really know when prices have bottomed out?  Or is waiting the best thing to do now?

Let me share with you a 5-part artice by Craig Guillot I read from BankRate.com, dated  April 29, 2008, “Timing Market big risk for first-time buyers”. Craig says, “they (buyers) may be outsmarting themselves….Some experts say the values still have along way to fall, leaving potential buyers wondering if  they should hold out for lower prices.  No doubt that’s a good question, but waiting also caries the risk that interest rates and home prices could start rising.  Expert say timing the market correctly is almost impossible and that for a traditional homeowner–who should be taking a long term outlook approach–timing is irrelevant.” 

He further states that inflation risks cause the long term rates to rise since it is not determined by the Federal Reserve but by the global bond market.  When the Fed cuts short term rates to help the failing economy, long term mortgage rates may actually rise.  Lawrence Yun, chief economist for the National Association of Realtors, recommends that potential homebuyers buy their home when the rates are still low.  “Consumers who are relying on what the Federal Reserve is doing will be surprised because mortgage rates at times may be doing exactly the opposite, says Yun.”

If you would like to receive a copy of this informative article, just email me at: Elizabeth@HomesByLiz.com and I will forward the article to you.

Elizabeth M. Eugenio (909) 376-8615

Email: Elizabeth@HomesByLiz.com, Website: www.HomesByLiz.com

Certified Distress Property Expert (CDPE), Certified Residential Specialist (CRS), Graduate Realtor Institute (GRI)

Buying a Home in a Declining Market is a post from: Chino Hills Real Estate Resource Center