The Skinny on Short Sales

Just the mind-splitting hangover some people wake up with after over indulging, some folks these days are coming to a painful realization. After the debt party many of us attended prior to "last call" on Wall Street in September of 2008, it is now clear that there are people with great credit, good income and property that is not worth what they paid or what they currently owe.

This may be due to purchasing at the peak of the market or pulling equity out of the property for other uses. The sad truth is that a lot of people who never thought they would be in this situation are crunching the numbers and realizing that they cannot continue to bleed money keeping up with their mortgage, HOA dues and taxes.
That, or they don't have the ability to keep up with these obligations due to a job loss or other crisis.

So how does one get out from under property that has become a burden ?

Back in the day, you simply stopped paying the mortgage and waited for the bank to foreclose and then sell your house on the courthouse steps. Soon after, the sheriff arrived to evict you and toss you and your stuff on the curb. How Dickensian.

Fortunately, things are a little more civil these days and people do have options. One of the best is to conduct a short sale.

Simply put, a short sale is when the lender agrees that your home is worth less than the debt secured against it. They would rather have the homeowner find a buyer and pay off what they can without the bank having to take possession through foreclosure and then be responsible for taxes, maintenance, and finding a buyer themselves. It sounds simple enough, but the process can be daunting and time consuming and not every person or every property qualifies for a short sale.

The larger banks have set up short sale departments and are implementing processes and standards. It's not a perfect solution, but it is getting easier.

In the coming months I believe that we will see more short sales and these transactions will take place in neighborhoods and developments that were once thought to be immune.

We are fortunate to live in a city that still has terrific fundamentals and a strong and diverse employment base. That coupled with global cachet will ensure that San Francisco will always be a desirable place to live and work which will, in turn, keep real estate values strong.

The real estate boom, like all parties, was sad when it ended. It's good to know that there is a cure for this particular hangover and it does not involve raw eggs, chili pepper or 'hair of the dog'.

If you have questions about the short sale process, would like to know if you qualify or want to purchase one, contact me.