Sometimes the solution to a distressed property is to get a loan modification, sometimes a short sale, sometimes accepting a foreclosure. A short sale, which we’ll explore in depth in the next few weeks, is one of several ways in which a property owner and a lender are able to resolve their difficulties with a property on which there is more money owing than the property will net the lenders in a sale.

This short sales series will be interesting and fun … if you respond … offering your experience and/or asking questions … what’s on your mind?

When the housing bubble first burst, short sales were like walking into a kaleidoscope … disorienting … Now, while technically difficult, short sales are becoming more rational (as opposed to easy or uncomplicated, which they are not). As lenders and agents have become more adept at producing results, short sales are moving faster and with less stress. I tell my sellers that 80% of the work is done up front.

Example one: This morning I met with a homeowner who, when we met with a CPA to explore options, was told (as I suspected) that it would be to his benefit to ride out the foreclosure (unless the stress level got too high) and enjoy the no rent situation. The short sale is not always the thing to do.

Example two: A client just left my office after our initial meeting. She owns and lives in a home worth right around $200,000 … the amount which she paid for it in 1999. In 2007, when she last refinanced it, her home was appraised for nearly $500,000. With a loss of income, a home that is over-encumbered and a notice of default, her home MAY be a good candidate for a short sale. Most agents would think so, I’m not so certain. Time and paperwork will tell. In the uncertainty is found the beauty of understanding the short sale … understanding who benefits (hopefully the owner, the buyer, the lender and the agent) ….

Now I’ll introduce you to a property that the lenders wish they’d been able to short sale … which will help you understand why the lenders benefit in avoiding foreclosure …. and OF COURSE … if you or someone you know wants a great grand home on lots of land … this Jeff Sterley listing could be the Bargain of the Century … even better than 10 Red Cedar!

For more pictures and information go to 1200CabroRidge.com …

This is a brand-new home that has been off and on the market for over two years. Starting price was near $4M. It was in escrow about a year and a half ago for $3.4M. The deal fell through and the property recently went to foreclosure.

The REO/lender now owns the property and wants to sell it quickly – asking price of $1.8M.

This is a Mediterranean home on 9 acres. Over 5,200 square feet on the entry-level … replete with dramatic high ceilings and a 300° view … There are approximately 2,700 square feet on the pool/deck level that has been roughed in … some work and fees remain to receive a certificate of occupancy … and the motivated lender wants to sell now!

Next installments … Part II, Laugher … and Part III, Why short sale?

Part II of XV, I Believe in Laughter
Part III of XV: How Homeowners Benefit

Questions, comments, stories …. all welcome.

For more information, please visit www.tomverkozen.com.

Posted by:  Tom Verkozen