If you have been looking for a home or thinking of selling your home in the western suburbs of Chicago, you probably have run across articles that 2012 is the "Year of the Short Sale"! So why all the fuss? Here are a few possible reasons that you as a home seller or as a buyer may want to reconsider a short sale as an option:
1. Top banks due to results of various lawsuits have amped up their short sale process promising improvements and quicker decisions on submitted short sales. Whether Bank of America, Wells Fargo, Chase, Citigroup or Ally...improvements have been made but only time will tell if these are just PR stunts or if they really will improve the time involved in a short sale. Improvements have been seen in many areas slowly getting many short sales approved in 90 days or less.
2. The continued low interest rates and healthy inventory in many areas have given buyers a large inventory to choose from but as many areas are seeing multi-offers in certain price ranges signs are pointing to more limited inventories which builds a sense of urgency in buyers that has not been present in the last few years.
3. Will the Mortgage Foregiveness Act of 2007 be renewed? Set to expire on December 31, 2012 this alone may get home sellers that have been waiting on the sidelines living with loan modifications that have left them more underwater than they were originally despite lower interest rates and longer loan terms thinking that perhaps its time to move on and do a short sale.
4. Banks and/or investors are finally realizing that with a short sale they have less carrying costs than a foreclosure. Servicers may not be happy since they may make less money in fees if a short sale is approved but if the foreclosure continues to climb letting the inventory come to market all at once would lower prices even more which would net investors even less. Perhaps investors are finally seeing the light and forcing the servicers to approve more short sales and make the process easier. Not sure if this is reality or just wishful thinking on my part.
If you are a home owner owing more than your home would sell for you might be a candidate for a short sale? More banks are realizing that a hardship can be the fact that you can't sell your home for what you owe on it so the traditional hardships are not always required. Traditional hardships are: loss of income, death, divorce, job relocation, marriage, medical issues, and too much debt. With some banks even offering relocation or seller incentives you might even end up with a couple of thousand of dollars in your hands for cooperating in a short sale!
Buyers, if you want a great deal, are patient and understand the short sale process you can benefit from this type of transaction. Although not the best choice if you are not flexible, are easily swayed by others opinion, listen to short sale horrors and don't really know what you want in a home, stick to a traditional home sale! Buyers need to be committed to the transaction, really love the home you choose and be willing to go the distance then a short sale can get you into a neighborhood and home that you may not normally considered!
Like any real estate transaction Buyers need to be pre-approved by a lender that understands the short sale process. You must be willing to spend a few hundred dollars for a home inspection and for applying for the loan ahead of getting the final approval. Sure there are some unknowns but if you can get your dream home it will be worth the effort. Although you may have to wait months for a short sale approval the banks require that you get your mortgage approved and Closed in 30 days - 45 days tops! So be prepared to jump through some hoops so make sure your lender really understands the time constraints involved!