Buy High, Sell Short

A short sale may be the answer from being in the upside-down mortgage position.  Values of real estate have plummeted, we get that. We hear it every day and with the stock market on what seems like a 500-900 point swing every day, every aspect of financial worth has been affected. Homes are worth less than even just two years ago. However, they are not worthless. And to lien holders, will do nearly anything not to own a home outright. The cost of foreclosure is too great.

And now with the courts lifting the foreclosure moratorium, the banks will have to consider how to put those foreclosed homes on the market. As a matter of fact, there have been homeowners in that situation that have been living in their homes for free for nearly two years.  Therefore a less expensive alternative for the lien holders is to allow the homeowners to short sale the home prior to foreclosure.

It is also a better alternative for the homeowner. There is little affect on a credit rating as opposed to a foreclosure, and compared to selling a home short without the use of the short sale through the lien holder, the seller does not need to bring a check to closing as well as not have to pay for the majority, if not all, its closing costs including the Realtor’s success fee and attorney fees. And most important, although the lien holder has a small say in the selling price, the seller still signs the sales contract. 

Right now until the end of 2012, the seller of the property has been given a reprieve by the Federal Government in having to pay income taxes on the difference between what they owe and what they sell their home for to the IRS.  The importance of this mandate is tremendous and immediacy is tantamount to saving you thousands of dollars, as many experts are saying, will not be extended, especially because of the current “horrors” of the national debt. The country cannot afford not to collect. 

There are currently many government programs that are assisting those in a short sale situation. Programs like HARP (Home Affordable Refinance Program), HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternative), although HAMP has been for very few, have and continues to be an answer for many, especially HAFA, as it has shortened the process and helps keep buyers and sellers coming to a closing table. 

The biggest hoop a seller must jump through is overcoming the feeling of embarrassment or failure. Neither is true. Remember, you did not cause the economy to collapse, and it is much better than being foreclosed. 

I truly recommend that if you do go this route, you must hire a Realtor, and attorney who are experts in short sales. Now many Realtors claim they're experts, but beware, they are not. Ask about their experience and do they have the support to handle it. A short sale does take longer than the traditional transaction and therefore, the buyer must be patient. It is that short sale expert that knows how to keep the sale together as they become the liaison between all parties involved, including the mortgagee, the mortgagor, the buyer, the attorneys and all other participants. In other words do not try it on your own. It is not only difficult, as previously mentioned, the experts are paid for by the banks anyway.

Have personal questions to the process, please contact me.  All conversations will be in confidence.

Jeffrey David Halpern

Broker-Sales Associate

Coccia Realty, Inc

973-377-4400

jeff@mycoccia.com