Short Sale vs. Deed In Lieu vs. Foreclosure

Several factors have contributed to our current real estate climate. In the past years, many people were able to easily obtain financing. Most people could qualify for a loan based upon a marginal credit FICO score alone. In an appreciating real estate market, homeowners had the ability to continually refinance their homes to take equity to use for living expenses, home improvements, and purchases. Today, the loan qualifications are stringent. People must qualify with good income, low debt to income ratios, higher equity percentages, and high credit scores. Declining home values have failed to support the required equity and ratios needed for many people to refinance their homes. Subsequently, many people who purchased their homes when the market was higher, or took equity from their home to refinance, are now “upside down.” That means they owe more to the bank than their homes would sell for.  In a “short sale” the seller attempts to market their home for a current market value offer, and then work with the lender(s) in an effort to have lender agree to a price less than owed. There are several criteria required to qualify for a short sale. The seller must produce evidence of a hardship situation such as loss of job, income, health issues, etc. and a lack of assets. What is the advantage of doing a short sale rather than letting the bank take the house back or giving a “deed in lieu” of foreclosure? Protection of one’s credit is one of the key elements, along with other components. Here’s a snapshot of the Fannie Mae guidelines. If you have a foreclosure, you may not be eligible to purchase a home for up to 5-7 years after the completion of the foreclosure sale.  There are other specific requirements, and exceptions for “extenuating circumstances.” The time period after a “deed in lieu of foreclosure” is approximately 4 years, and generally only  2 years for a “short sale.”  As a neighborhood homeowner, anytime I see a distress sale, my heart goes out to every single homeowner who is or has experienced a hardship that might ultimately result in a short sale or foreclosure.  It is also disappointing to see how those sales may affect our market and comparable neighborhood sales, however, please know that our neighborhood, and our City, has experienced a much lower percentage of decline compared to other areas of San Diego County. As an experienced, successful short sale listing agent, I can help counsel and guide anyone who may be in a position where they have little or no equity and need to sell their home. I know what it takes to put the short sale package together, and aggressively market the home for a FAIR and REASONABLE market value. It is upsetting to me to see other neighborhood homes come on the market as short sales, without the listing agent marketing them in an effort to achieve a fair market value price. Just today, a Summerfield home on Crest Drive came on the MLS for $450,000, a short sale, immediately in “contingent” status with an accepted offer pending lender approval. From what I could see, this home was never put out there on the market first, to obtain the highest bids, and could ultimately result in a very low sale that could adversely affect neighborhood values. Furthermore, the photo is the MLS appears to have taken from the previous listing years ago, and looks nothing like the home at present. No marketing or advertising and no effort to achieve a fair market value, from what I can tell.  If you or anyone you know are in a position where more is owed than the home is worth in today’s market, please give me a call. I will provide an honest, empathetic, experienced point of view, and help you or someone you know make an informed decision with what’s right for their current situation. I know what to do, and I’m here to help. With two decades of experience, I’ve weathered all markets, and I’m here to make the bestof any situation!

Sincerely, Linda Moore

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