Short Sales

What is a Short Sale?

In the real estate business, a short sale is the sale of a home where the proceeds from the sale are lower than the balance owed on the property’s loan. If an owner attempts to sell a property under circumstances such as these, they would have to pay the lender cash out of pocket at the close of escrow in order to finalize the sale. There are not many home owners that are anxious to do this and decide to instead let their home go into foreclosure. A short sale usually happens when a borrower cannot pay the mortgage on the property and wants to sell the home, but the lender decides that selling the property at a medium loss to the amount owed is a better option than foreclosure. Both parties agree to the short sale process, as foreclosure includes significant fees for the bank and worse credit for the home owner in the years to come.

Is a Short Sale right for you?

We know that making the decision to short-sell your home is a large one. We find, however, that when many of our clients decide, they feel like a large burden has been removed from their shoulders. Short selling your home can be one of the most wise financial decisions you can ever make.

  • Why keep a property that is no longer worth what you paid for it?
  • Why struggle month to month and be house poor?
  • Why pay a $700k mortgage when the similar house right next to you sold for $400k?

It is not your fault that the neighbors around you are selling low and devaluing the area. It is not your fault that you cannot refinance your adjustable rate mortgage due your loan to value being too high.

Be sure to take advantage of tax breaks that are available now while you can and offload that mountain of debt. You are NOT alone. You are one of millions of people in this very situation. Milton Estrada can assist you to get out of this situation and it will most likely cost you nothing in return!

The Two-Year Plan

  • Where do you think you will be in 2 years?
  • If you keep your property, will you stay underwater?
  • Did you know that if your property devalues 20%, it’ll have to go UP by 25% in value in order to get back to where it previously was?

As an example, if a $500K property dropped 20% to $400K, it then has to go up by 25% in order to get back to $500K!

How long do you think it will take for home values to go up by 25% (or even more, depending on your particular situation)?

If you believe it will take 2 years or more for your home value to return to where it was previously, then a short sale may just be right for you. In two years, you’ll be able to buy a home of similar value to your current one and at a much lower price than what you currently owe! By using the above example, even if property values go up by 5% a year over the next two years, you would still be buying a home that is similar to your own for $440K. That is a savings of $60K!*

*This scenario is assuming that you will pay all of your bills on-time for those two years and that you will get your credit score back up.