Short Sale Definition
A short sale is when a financial institution agrees to settle for a lesser amount than the total sum you owe on a mortgage, thus avoiding foreclosure. Short sales have existed for a while, but it wasn’t until the recent downturn in the housing market that a “short sale” became household terminology.
If you find yourself in the position where the proceeds from selling your home fail to pay off your present mortgage, a short sale might be worth considering. Before you commit to a short sale, you need to weigh your options. Hiring an experienced short sale realtor in CT is a good place to start.
Eligibility for a short sale
In order to be eligible for a short sale…
- You need to owe more on your mortgage (or mortgages) than your property is current worth.
- You need to establish a genuine “hardship.” For example: A job loss or reduction in income, death, divorce, adverse medical condition, etc. These things can help the bank verify that you aren’t able to bring in the same household income that you once did.
- In almost every case, the lender will require that you are behind in your mortgage payments to be considered for a short sale.
Why does a short sale make sense?
Sellers who go through with a short sale generally do so to avoid foreclosure. A foreclosure can adversely affect the homeowner in various ways. A foreclosure leaves a negative mark on your credit report that will make financing larger purchase (real estate, cars, etc. ) much more difficult in the future. A short sale also has a negative impact on a credit report, but a foreclosure is relatively much more negative. A short sale will also be removed from your credit report sooner than a foreclosure will.
Not every realtor has experience with short sales. Short sale realtors in CT may suggest a short sale for a number of reasons that are specific to each property owner. Every case is unique.
The main advantages of short sale
A short sale specialist in CT should be able to explain the benefits of a short sale. Some of those benefits include:
- After a short sale, you might need to wait only 1 or 2 years before being able to obtain a new mortgage and purchase another property. With a foreclosure, you often have to wait 5 to 7 years before you can obtain another mortgage.
- A short sale has less of a negative impact on your credit score and credit report than a foreclosure.
- You can often stay in your home longer, while you are working through the short sale process and weighing your options for your next move.
- Working closely with your short sale specialist, will help you carry out the negotiation of your short sale.
We’re starting something new! Each week we will be updating you on changes to the short sale market, including the total number of properties for sale in each town, and the number of those that are possible short sales and those that are bank owned. Our goal is to communicate the normalcy of this process in your area, and that you are not alone in struggling.
To the right, you can select the town you would like to see. On that page is a table that contains the short sale market history. Eventually, you will be able to see the trends in the market over time, but it will take a little while to gather adequate data. For now, here are the town comparisons for this week:
|Town||Total Listings||Active Listings||Possible Short Sales||Bank Owned|
*Numbers have been found through searching the Connecticut MLS
Wells Fargo, Citigroup, and JP Morgan cut back considerably on foreclosure sales in several states to adjust for the new minimum standards designated by the Office of the Comptroller of the Currency. These regulations have also been issued by the Federal Reserve, making them an industry standard. As of now, JP Morgan is back to functioning as usual, with Citi not far behind.
Check out the full article from American Banker.
Listing Price: $1,295,000
Large Mediterranean-style house on 1.67 acres overlooking pond.
Located in private association. Recent addition completed in 2006.
Listing Price: $399,000
Listing Price: $399,000
Great Convenient Location – 4 Br Expanded Cape On Lovely 1.12 Corner Lot, Master Bedroom Very Spacious W/ Private Bath And Sliders To Patio, 2196 Sf
14 Phillene Drive, a short sale house in Norwalk, was just listed for $520,000.
Here are the remarks from the listing:
3 BR RAISED RANCH ON CUL-DE-SAC – 2.5 BATHS – 2 CAR GARAGE – LARGE DECK – POTENTIAL SHORT SALE – AGENTS SEE ADDENDUM FOR BAC.
To see the actual listing for this property, CLICK HERE.
Any questions on a short sale in Fairfield County? Visit www.ShortSaleCT.com for more information.
4 Union Ave # 25, a short sale condo in Norwalk, was just listed for $239,000.
Here are the remarks from the listing:
2 BR, 1.5 BATH TOWNHOUSE – PERGO FLOORS – CROWN MOLDING – CENTRAL AIR – POOL IN COMPLEX & SMALL PLAYGROUND – PETS ALLOWED IN COMPLEX – SHORT SALE SUBJECT TO BANK APPROVAL – AGENTS SEE ADDENDUM FOR BAC
To view the full listing, CLICK HERE.
Are you considering a short sale for your property in Connecticut? Send us some info about you and your situation for a free short sale consultation: http://shortsalect.com/apply-now/
Short sales have become a household name since the housing downturn. In fact, homeowner’s opting for a short sale has become 11 times more common since 2008. That trend looks to continue for at least the next couple of years.
DBRS.com, a market analyst, expects continued downward pressure on the real estate market. They cite the weak economic recovery and looming shadow inventory (properties behind on their mortgage but haven’t been foreclosed on) as main reasons.
The shadow inventory is a particularly interesting topic since we just talked about that in our last blog post. The shadow inventory in CT (judicial foreclosure state) will dissipate at a slower pace than ones in non-judicial foreclosure states. Many owners to opt to do a short sale in CT have been living in their home for at least 3-6+ months without paying their mortgage. Some sellers have been living in their home without paying their mortgage for over 3 years! When the pressure eventually comes from the bank to foreclose on them, they go ahead with the short sale, although every case is different. This has driven short sales to become 11 times more common than they were in 2008.
To read the entire article from DSNews.com, CLICK HERE.
Do you have questions about a short sale? Check out our Short Sale FAQ page on www.ShortSaleCT.com. Interested in talking with one of our Short Sale experts? Send us some basic info for a free short sale consultation.
Foreclosures slowed in 2012, but could possibly pick in 2013 – this according to a recent report from RealtyTrac.com. Here in Connecticut, we actually saw an INCREASE in foreclosure activity.
Out of the 25 states that saw foreclosures increase, 20 of them use the judicial foreclosure process. Connecticut is one of those states, and here in CT we saw foreclosure activity increase a whopping 48% from 2011. So while foreclosures might be down nationwide, we are seeing a different story here in Connecticut.
Why the increase in activity in CT?
The judicial foreclosure process is a longer process than the non-judicial foreclosure process. Because of this, foreclosures sit in the pipeline much longer in states like Connecticut.
For example, Texas is a non-judicial foreclosure state and a foreclosure can be completed almost as fast as an eviction! According to RealtyTrac’s report, Texas’ average days to foreclosure stands at 113. New York, a judicial foreclosure state like CT, leads the way with 1,089 days to foreclose! Because of the time needed to foreclosure, there is a bit of a lag of properties to come on the market here in CT. The bank-owned properties that will come on the market here in CT in 2013, have likely been in the foreclosure process for a couple of years.
To read the entire report from RealtyTrac.com, CLICK HERE.
Short sales on the rise?
Many short sale situations come up when the seller is facing foreclosure. It stands to reason that if more owners face foreclosure in 2013, that we might see short sales rise here in Norwalk and other towns in Fairfield County as well. A short sale is more appealing than a foreclosure as it is less damaging to a seller’s credit and also helps wipe out the deficient balance owed to the bank after the sale.
For more information about foreclosures and short sales in Norwalk and other towns here in Fairfield County, visit www.ShortSaleCT.com
Many homeowners considering a short sale want to know about the tax implications. They don’t want the shortfall to be viewed as taxable income since owners facing a short sale are in a tough financial position to begin with.
The Extension of Debt Relief Act means short sales will continue through 2013. According to DSNews.com:
“The Mortgage Debt Relief Act allows forgiven debt through a short sale, loan modification, or foreclosure to be excluded as taxable income.
The act faced expiration December 31, 2012, but Congress extended the act for another year on January 1.
This extension hasn’t been well publicized but it is important to homeowners and Realtors nationwide. Had this law not been extended, it could have brought a drastic halt to short sales and had a devastating effect on underwater homeowners…”
Short sales are preferred by banks compared to foreclosures, and the extension of the Debt Relief Act makes is possible for short sales to continue through 2013 without interruption.
To read the entire article from DSNews, CLICK HERE.
Questions about a short sale? Are you considering a short sale yourself? Visit www.ShortSaleCT.com for more info, and contact Jason Milligan for specific questions.