I have been listening to the radio a lot lately. I am definitely what some people would call a "news junkie", so it should not surprise anyone that I listen to a lot of National Public Radio. What prompted me to write this Blog posting is that the topic on one of the programs I listened to this week was the state of the mortgage industry and the ripple effect of foreclosures on the economy.
One of the big economic impacts of foreclosures is their effect on non-foreclosure home prices in neighborhoods. As a real estate agent, I recently sold a client's home that suffered from decreased value perception because another home on the same block had sold for significantly less in a foreclosure transaction just several months prior. Home prices in the neighborhood had not eroded when I listed this home, in fact they have held up very well in the recent market, but imagine if that nearby foreclosure had been 2, or 3, or even 10 in a neighborhood. In some parts of the country (and even some parts of the Dallas/Fort Worth Metroplex) this is currently the norm and eventually it will impact more and more of us.
As I listened to the radio, all I could think was, "How many of these foreclosures might have been avoided?"
If the ripple effect of foreclosure is that it drives neighborhood home values down and indirectly causes homes to remain on the market longer as homeowner selling their homes wait for higher offers, how can we "cap" the damage they cause? Short Sales can help.
Have you ever heard of a deal being called a WIN-WIN because both sides of the transaction benefit? Well Short Sales are what I call a WIN-WIN-WIN-WIN and this is why I love working with clients on Short Sales. Completed Short Sales result in the sale of a client's home at slightly below market value, allowing the home seller to avoid the negative impact of foreclosure on their lives, the buyer to get a great deal on their new home, the preservation of home values in neighborhoods (versus foreclosure sales) and the seller's mortgage holder avoids the costly and time consuming foreclosure process. So you see, EVERYONE WINS!
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I wish there would be an asterisks on home sales that go below market value. It is a hard pill to swallow when a client needs to re-fi or sell. great post!
Jess Rankin, Pickering Group
www.pickeringgroup.com (lender in all 50 States)
www.jessrankin.com (Video Email Guy)