What’s Happening with Real Estate Short Sales?

Of the 144 residential homes on the market for sale in Maplewood as of October 6, 112 were listed as regular sales, 28 as short sales, and 4 as foreclosures in the Garden State Multiple Listing Service (GSMLS). The GSMLS is the source used by Real Estate agents to promote homes for sale to other Real Estate agents and potential home buyers.

A regular sale is when the homeowner can sell his home without distress in an arms-length transaction. A foreclosure is when a bank entity has now taken ownership of a property.  A short sale is when the homeowner owes more money to one or more banks than a home is worth and is asking the bank(s) to accept a lower amount than what is owed in order to sell the home. In New Jersey, this may be done with or without recourse, which means a bank may still ask the seller to cover a portion or all of the difference upfront or with a new loan/agreement. To understand even more about short sales you can read articles that will give you details and highlights.

My Real Estate partner and husband Bob Meaux and I have been talking about short sales and foreclosures for awhile and work hard with our short sale team to guide the homeowner through this often difficult and consuming transaction. While short sales have the reputation of not being a short process or failing completely, some do work out. Take for example the short sale we listed in West Orange. It sold last month for $40,000 over the asking price, after having multiple offers, and the entire transaction was completed in less than 45 days. This surprises many people because the untrue assumption is that all short sales take a very long time to close.

There are articles online about getting cash from banks to sell your home and advice can be found from almost everyone. The cautionary note: even when you talk to someone like an attorney, accountant or Real Estate agent make sure they have experience in successfully completing short sales, and educate yourself as well. Always check the information you are being given regarding your rights, your options and what the impact differences are between a short sale and a foreclosure. If you’re in this situation, always consider a loan modification first.

As of October 6, 19% of the Maplewood homes on the market for sale were short sales compared to 16% of the homes on the market in March 2010.  When a home is listed for sale, GSMLS requires a notation if it is a short sale. Unfortunately, if homeowners owe more to the bank than the home can currently sale for but have the money to cover the difference, it is not a short sale and the homeowner does not have to list the home as such. Even in this case, though, Bob and I still sometimes feel they should because a buyer has the right to know the sale may be in jeopardy if the seller, for whatever reason, now cannot come up with the difference – which can sometimes be significant - on the day of closing. There have also been situations where the homeowner forgot to count in the home equity loans as part of what is owed at closing – the day the home is transferred from the seller to the buyer -- and just days before closing realizes he doesn’t have enough money to close. As much as possible, due diligence must be done by the listing agent to confirm the ability of the homeowner to sell, then the selling agent (the person representing the buyer) and the buyer’s attorney should also ask the pertinent questions.

Short sales are here to stay for a while in Maplewood and surrounding towns. Whether or not you are looking to sale or purchase a regular sale, a short sale or a foreclosure, just take the time to understand the differences of these types of sales and figure out which one is best for you based on your time, patience, finances and current life situation.