Many homeowners know they need to sell, but they’re hoping to regain some equity first. If home prices just picked up a little, the reasoning goes, they could exit with some cash in their pockets—like in the good old days of ’04 and ‘05.
It’s an empty dream, according to figures from the industry’s most credible sources. In November 2011, prices in ten major cities dropped by 3.6 percent from the year before, according to the S&P/Case-Shiller home price index. Expanding the composite to 20 cities, the dip was 3.7 percent .
But it’s going to get better, right?
Not for awhile, unfortunately. Analytics company Fiserv expects prices to begin rising later in 2012—but only to 2.4 percent for the following year. A recent Reuters survey of economists was more pessimistic, predicting no price gains till 2013. And another survey of bank risk managers found that almost half of them don’t expect a complete price recovery till 2020.
Which brings us to the short sale option. While some underwater borrowers are truly stuck in their homes for the time being, a short sale could be just the thing for many others.
So, why don’t they go for it? Many simply haven’t been shown the benefits.
If you’re a short sale agent, you should be enthusiastic about helping homeowners understand this potential solution. And if you’re a hesitant homeowner, ask yourself if one of these applies to you:
- You truly can’t afford your current house payment.
- You tried to get a loan modification, but were denied.
- You’re being transferred.
- You lost your job.
- You’re about to lose your job.
- You’ve experienced unexpected medical bills.
- You’re going through a divorce.
All these are good reasons to consider a short sale—and likely to be recognized as such by your mortgage lender. Ideally, you could walk away free from all your mortgage obligations and get a fresh start.
Consider what that would feel like. Then, take the first steps.