Tuesday, April 03, 2007

Short Sales

For those of you who follow the news of southeastern Michigan and the auto industry, you know just how much our real estate market has declined. Today Michigan is 5th in the country with foreclosures. Detroit is #1 of all cities in the country, with 1 out of 21 homes in foreclosure. There is more reason for this than just the auto industry, such as mortgage practices that put many homeowners in an "upside-down" position.

With this situation if an owner has to move, and does not have cash to take to closing, as Realtors we are suggesting to the owner to try to work a deal with the lender to take less than is owed on the mortgage. This is called a "short sale."

You might question why a lender would do that, but often they are better off taking a little less now than spending over a year going through the foreclosure process with mounting legal fees, taxes, and utility bills to pay. Plus there's the concern the lender should have of sitting with a vacant house that could be vandalized or have frozen pipes in the winter or whatever.

From the owner's point of view, they end up with a rather mild "blip" on their credit record as compared to going into foreclosure which stays on their credit record for TWELVE years and makes it difficult to get another mortgage at a reasonable interest rate during those years.

Difficult as it is to lose a home, we encourage owners to face the issues early on while there is time to possibly work a deal with their lender. As Realtors many of us are able to provide asistance with the process.

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