Are People Using "the short sale" to relocate by choice?

Real Estate Broker/Owner with Crown Key Realty, Inc; Tracy & Mountain House Sales and Property Management 01490605

SHE HAS THIS..... a house that's upside down                   She wants this.......

She has this....          She wants this...


You see what Sally Seller thinks she has... you see what she thinks she wants... will the banks allow her to relocate via a short sale?

Sally Seller is upside down on the home she purchased 7 years ago.  

According to NAR people HISTORICALLY move or refinance every 5 - 7 years.  Sally Seller has reached the 7 year mark.  She can't refinance because she owes more than she can sell her home for.

Her best friend, just moved across town into a home twice the size of Sally's for half the price Sally pays monthly.

Sally Seller tells the bank that she can't afford her payments anymore, and she works deligently along with her REALTOR towards a successful short sale.  

What happens NEXT, is a trend I'm starting to see.  It's happened twice in the past 2 months to short sale sellers in Mountain House and Tracy, CA.

The bank offers the seller a HUGE reduction in payments.  Yep, the bank will lower their payment to todays value of the home, today's interest rate, thus making it "affordable" for Sally Seller to keep her house.  This is a 30 year mortgage, with a silent deficit waiting for Sally to sell or the housing market to catch up.  

Sally is NOT HAPPY, she didn't want her payment reduced she wanted a short sale, she wants a new house.  So now what?  

Are you seeing this trend?

Comments (3)

Dale Bledsoe
Crown Key Realty - Tracy, CA
Realtor in Tracy, California

It's just my humble opinion but it seems that a lot of people have forgotten that they entered into a good faith agreement with the lender. Now that times and prices have changed they don't like the agreement they signed. In your example the bank willfully modified that agreement to fit today's market realities but the home owner is still not happy. Not the banks fault, and the borrower wants out even though their financial situation would allow then to stay IF they wanted to stay. I say that this is as fraudulent as some of the practices the banks have been accused of. Just my humble opinion.

May 10, 2012 05:14 AM
Gary Frimann, CRS, GRI, SRES
Eagle Ridge Realty / Signature Homes & Estates - Gilroy, CA
REALTOR and Broker

Ahhhh, the bank called her bluff.  No hardship, eh?  Lending does not work "Heads I win, tails you lose."
She should take the deal...  Rents are going through the roof.  I have seen this ploy often.  They would think nothing of selling if they $100 in equity! Just my two cents, but I am pissed at people who add to the problem.

Jul 01, 2012 05:43 PM
Katerina Gasset
Get It Done For Me Virtual Services - Wellington, FL
Get It Done For Me Virtual Services

Thank you so much Susan! This blod is really amazing, very informative. Keep it up!

May 22, 2014 12:25 AM