This blog post is directed to home owners as well as real estate agents as well. I recently have had multiple conversations with owners about the information that they heard from friends. That was the first problem. Be very careful who you get your information from! I would never call an accountant and ask why head hurts, so why would someone listen to your primary care doctor, about real estate advice? There is a lot of bad information going around about short sales and loan modifications. The first is that Loan modifications work because they don't. I'm not saying that you can't get a loan modification but what I am saying is that it's not going to be what you expect and there is a lot risk in trying for one. If you are one of the lucky (2%) of owners that actually get a loan modification you most likely aren't going to get a principal reduction! You won't be alleviating any debt with this option. When you are doing a loan modification you will need to miss payments in order to qualify for one. The risk is that when you are missing payments on your house, generally the bank will treat it just as if you're a homeowner who stopped making payments. They will file a notice of trustee sales after you've missed 3 months of payments( normally but not always) and then they may or may not postpone that trustee sales date (Arizona doesn't foreclose we have trustee sales). You take the risk of losing your house when you do a loan modification and a lot of people don't realize that.
I also talked with someone doing a deed-in-lieu. Which is essentially deeding your property back to the bank so they don't foreclose. The harsh reality of this option is that it doesn't help the owner at all. It hurts you just as bad a foreclosure does on your credit. All you are doing is helping the bank out.
Which brings us to short sales. These are my favorite option and not because I am a real estate agent who has been doing short sales for the past 7 years but because it helps owner to alleviate debt. When you have a short sale on your credit and not a foreclosure, it positions you to rebuild your credit quicker. It also puts you in buying power sooner to purchase a new home. When you purchase that new home you will be able to enjoy the appreciation in value instead of waiting for the nest 10 years for your equity to get to ZERO!
Now with government programs you may qualify to get paid 3,000 or more to do a short sale. That's on top of not having to pay a real estate agent to sell your house. Now more than ever you have the ability to get rid of the negative equity in your home and position yourself for a brighter future. We have more information on our website so look around and enjoy.
