It’s official.
Our house has been on the market for close to 60 days. When looking at that number through the lens of the 2004 housing market, it seems like an eternity. But in today’s market, it’s not even considered a blink of the eye.
We’ve had a number of showings and our Realtor is optimistic that we’ll get an offer soon. Since we never took out a home equity loan and because we bought our home five years ago, we stand to make a nice little profit, which we intend to use as the down payment on our next home.
But others are not as lucky as my husband and I are. Many borrowers are falling behind on their payments and may face foreclosure. Housing experts predict that, with so many adjustable rate mortgages adjusting to higher rates, in the coming months we’ll see a sharp rise in the number of foreclosures.
Many sellers are turning to what’s known as short selling as a means of climbing out of their financial dire straits. Here’s how it works: In a short sale, the lender allows the property to be sold for less than the total amount due on the loan. In some cases, the lender forgives the remaining debt.
When the housing market was booming and real estate values were appreciating in the near double digits, short selling was virtually unheard of. But with a slower market, more and more home owners are looking to this practice as a way to avoid a costly foreclosure.
The benefits of short selling over foreclosure are obvious. A foreclosure puts a long-lasting black mark on your credit history and the process can be long and costly. Short selling can be much faster and less expensive, and it doesn’t look as bad on your credit report as a foreclosure.
Convincing a lender to short sell a property, however, can be very difficult. In addition, the amount of the loan that the lender forgives in a short sell could be taxable to the borrower, so don’t think that short selling is the easy, cure-all for the borrower who has fallen behind in his payments.
Several Web sites can help you learn more about short selling, it benefits and its downsides.
First, check out http://real-estate.lawyers.com/residential-real-estate/Selling-Your-Home-For-Less-Than-You-Owe.html. This site offers a nice overview of short selling and what’s involved in the process.
EHow.com also has a great overview of short selling offers an outline of the steps necessary in a short sale. Go to www.ehow.com/how_8132_short-sale.html.
About.com has a lot of information about listing your home for sale and working with a real estate agent. Go to http://homebuying.about.com for more info.
Romi Carrell Wittman is a Tucson-based freelance writer. She has more than 10 years of experience in marketing, Web site strategy and corporate communications. She can be reached at r.wittman@cox.net.