Why do people let properties foreclose when they could have sold as a short sale instead?
Perhaps we should revisit this article from REALTOR.com
Alameda CA remains as a very popular and sought-after place to live. Although the property values also suffered during the crash, we are now seeing signs of recovery, judging from the multiple offers and overbidding lately.
What surprises me is when people had a chance to do short sales, but didn’t, and ended up being foreclosed.
In the last few years, I met with some property owners and proposed to them to attempt a short sale. Some of them already received a Notice of Trustee Sale by the time they called me, but I was able to get them in contract and get the short sale approved. Those are the success stories.
But then there are those who didn’t.
I saw a beautiful property in desirable neighborhoord of Bayport, listed as bank-owned. When I checked the history, it turned out that it was owned by a Realtor. Really?
Then there’s a family of 7 whom I helped buy their dream house. Later, they fell on hard times. The parents were on the brink of having a third party help them get their loan modified when they pulled out, and said they will try to do it themselves. When I saw that they were terribly behind their payments and that they already received a Notice of Default I asked if they would consider a short sale. They said absolutely not. That property foreclosed.
An investor I know was actively buying and renovating fixers. One of his properties showed up as being delinquent. So I asked him if he had considered a short sale. He said he was getting his loan modified. Today, I read that it was just foreclosed.
Since the Mortgage Debt Forgiveness Act was just renewed (California's state legislature hasn't yet on the state level), it seems we should redouble efforts to guide people on their options besides letting the properties foreclose.