Sacramento Real Estate Views

Short Sales Are Becoming Easier!

Government Program Encourages Lenders To Accept Short Sales

Facing the fact that your home has lost 50% of it’s value is very real here in the Sacramento region.  Even the best areas have lost a minimum of 40% of their value since the peak of 2006. Some areas have lost even more.

Most homeowners, roughly 70% in our region, owe more than their homes are worth and will be worth for years to come.  Nationally, 25% of mortgages or more are underwater.

This is unprecedented in the history of our country.

I have a client right now who purchased a home in Loomis for $864,000.  Today it’s worth, at best, $425,000.  They owe $820,000 on this home.  When will this value come back?  Let’s take a hard look.

Being incredibly optimistic and assuming that our local real estate market will, as of right now, began appreciating at 8% per year, how much will this home be worth in 10 years?

Current Value – $425,000	Future Value @ 8% annually
After 1 year	$459,000
After 2 years	$495,720
After 3 years	$535,378
After 4 years	$578,208
After 5 years	$624,465
After 6 years	$674,422
After 7 years	$728,376
After 8 years	$786,646
After 9 years	$849,578
After 10 years	$917,544

As you can see, after 10 years, IF our market began appreciating right now at 8% per year, you’d finally have $53,544 in appreciation equity.

The problem with this scenario is that our region is still losing value, especially in the upper end homes like Loomis, Rocklin, Roseville and Granite Bay.

The national average appreciation is currently at 5.5%.  That rate of appreciation has this home being worth the price purchased in something like 15 years or more.

Do you have time to wait for your home value to come back?  Most don’t.

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Selling Your Home Short

On April 5, 2010 the government put into affect a bill in conjunction with the loan modification program to help people who can’t modify their loans to sell their home short without suffering major consequences.  (Click here for detailed information on this program)

Briefly, selling short is being promoted by the U.S. government as a way to avoid the foreclosure process.  This is GREAT news!  There is more pressure than ever before on the banks to work with homeowners!

If you have decent credit, you can sell your home short and in a very short time, 2 years is the guideline for most lenders but others even less, you can purchase another home and be in FAR better shape than the scenario above.

Just taking the appreciation over 10 years into account, if the seller of the home above decided to buy their home after 2 years, at the end of 8 years of ownership they would have $421,824 vs. $53,544 in appreciation equity!

Where would you rather be?

The facts today are that selling short saves the banks thousands of dollars vs. foreclosure.  The government is PROMOTING and PAYING the banks to work with sellers to sell short and avoid foreclosure!  This is an incredible opportunity!

The time has never been better to get yourself back on the road to a solid financial future and a solid retirement without the stigma that you’re a “bad person” for making a smart financial decision.

Our financial institutions, like Morgan Stanley who walked away from $2.43 BILLION in real estate in downtown San Francisco last year, make decisions like this everyday.

If it’s smart financial decision for them, wouldn’t it make sense it’s a smart decision for us?  Click here for a report from Professor of Law Brent White at University of Arizona regarding these financial decisions.

Your neighbors are considering this…trust me.  Mine are!

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Selling Short or Walking Away Has Consequences

Just as you would expect, selling short, foreclosure or walking away from your mortgage will have consequences.  We advise that you contact a financial or tax expert for all the possible ramifications of these financial decisions.

Some of the ramifications include:

1) Damage to your credit rating

2) Potential deficiency judgment from your lender

3) Tax ramifications

Please consult with financial or tax experts before making any decision to sell short or walking away from your mortgage.

If you’re considering selling your home short, please consider utilizing our services.  We have a team of professional negotiators that can get your home short sale approved in 90 days or less*.

Our Team

Our team consists of professional negotiators that have successfully negotiated short sales before it became easier to get them approved.  We are connected with the banks and can help get your short sale approved as quickly as possible AT NO COST TO YOU.

We’re sensitive to the situation  you’re in because like you, we’ve been through it too.  Many, many people in the real estate industry, due to the market downturn have all but lost their business and at best, their incomes have been dramatically reduced.  This has put many of us in the same position as you are in, making the same tough choices that you’re making now.

We’re here to help you get through a tough time and come out with a fresh start.  The bright side of this is that in a few years, the prices, in all likelihood, won’t be much different than they are today and you’ll be able to purchase more home for less money.

Selling short is a far better option to foreclosure.  Please call us when you’re ready.

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*How long getting short sale takes to be approved is predicated on bank response.  Some banks respond quickly others take longer.  We generally get approvals in no more than 90 days.