The world is changing! This sounds like an overused cliché these days. The author has been a real estate professional since 1993 and the real estate world has changed more in the last three years than the other fourteen years combined. It hasn’t been easy to accept the changes and some real estate professionals have accepted and evolved much quicker than others. These professionals who adapted early are the most successful in our market today. With these dramatic changes, what does that mean to those of us who own real estate? It means that everything we once knew about our investment in our home or other properties doesn’t apply anymore. Real estate professionals have had to adjust their vision and efforts to meet the changes in the real estate market and the economy. Home owners will have to do the same. What are these changes, how will you have to adjust and what does it mean to you financially?
Scott Green with Law Avania in Charlotte, recently informed a group of Winston-Salem realtors and lenders that 43% of North Carolina’s real estate sales during 2010 have been distressed (Short Sales, Foreclosures or Bankruptcy) sales. Understanding what this means to the appraisal values of those of us who haven’t sold in this new real estate world, is that our homes are not worth what they were three years ago. These distressed sales, create comparables for appraisers to use that many lenders want to see when considering a loan for the buyer of a home today. Many homeowners who have mortgages with only 5, 10 or 15% equity three years ago; may have little or no equity today. If these homeowners need to sell their home because of change in income, a new job or family circumstances; they may not be able to sell their home for enough money to pay off their mortgages. What does this mean and how do they complete the sale?
One option is to provide the funds out of your own pocket to make up the difference. That can be a tough pill to swallow in today’s economy.
Another option is to Short Sale the home. What is a Short Sale? This is when you sell the home for less money than you currently owe and the bank agrees to accept those terms and allow the transfer of title to the buyer. The funds to pay off the mortgage are short. The bank agrees to take less than they are owed. Sometimes this can be accomplished with the bank agreeing to never seek the deficiency or difference owed from the Seller. Consult a knowledgeable real estate professional to accomplish this.
In the case where you do not have the funds to help pay off the mortgage or the mortgage company will not agree to a short sale, then three other options are available; a deed in lieu, foreclosure and bankruptcy. You should consult an attorney while considering these options.
A Deed in Lieu is when you and the bank agree that you will give (deed) the property to them. Many times, they prefer this over foreclosure. Foreclosure is a very expensive process for the bank. When they acknowledge that your property value is less than the mortgage balance, you are unable or unwilling to pay the difference, you are unable or unwilling to continue to make payments and that the end result will be your surrender of the property; then most banks prefer to accept your Deed in Lieu of foreclosure. In most cases this allows for much less physical and emotional stress for the debtor also.
If the above options are not something you can accomplish and you are unable to continue to pay your monthly payment, then the bank may seize the property in foreclosure. This is an undesirable process for the homeowner and the bank. Do as much as you can to short sale the property or Deed in Lieu before the process gets this far.
Depending on your other debt and financial obligations; and after seeking the above options first; consult an attorney to discuss your ability to file Bankruptcy.
Many times your family, friends and coworkers will not disclose the challenges they face in their life. Keeping the atmosphere outside of those challenges positive and optimistic is a noble desire and is sometimes emotionally beneficial when living through a tough situation. Reading this, consulting with a real estate professional or an attorney may help them find their way through a touch situation. Realtors and attorneys have a fiduciary responsibility to keep confidential the information they receive from a client. When in a tough or embarrassing financial situation you can feel comfortable discussing your circumstances with these professionals.
Remember, you may not know who is facing challenges with their finances or home. Share this article by emailing it or by visiting www.realestateperformancetoday.blogspot.com to post this article for your Facebook friends to see. There will be future information available to assist in your real estate performance. Visit Facebook.com/JoshGreer, send a friend request so that you can see future market news and visit www.JoshGreer.com for local real estate resources.
Finally got it going.... Well done. Good info
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