Short Selling and Foreclosures

A week ago, I showed my first property that is a short sell. The property was selling at a lower price than it probably would have been marketed otherwise. I was told, once I got to the agency, that there was already an offer on it. Short selling is a pre-foreclosure option. It will adversely affect your credit, though not as badly as a foreclosure. When someone short sells, they put the property on the market for what they realistically think they can get for it. There is no point at all in overpricing. The idea is to sell the property and get the bank/mortgage lender to agree to take whatever you can get for the property. Sellers resort to this when they are "upside down", meaning that the mortgage they carry on the property is as much or greater than the current value, and they need to get out from under the obligation.

It is in the best interest of the bank, when the seller cannot pay their mortgage or must sell the property for other reasons, and the sellers only other recourse is full foreclosure. A foreclosure is very costly for the bank and a short sell means that they will recoop more of their money. I have heard of a few short sells in Hoboken but it is not the norm here at all, though it is becoming much more common in the suburbs. It is very common these days in areas most hard hit by the current real estate decline. In many places like Southern Colorado, short selling and foreclosures are extremely common.

Though we'll see short sells and foreclosures here, most people in Hoboken have the income to weather temporary losses which is advisable in terms of one's credit. Sellers who have bought in the last two years or added a second mortgage, have the option of renting in Hoboken. Sometimes this will mean a monthly loss, but in the long run, it is often best to wait out the current market by becoming a landlord. We are hoping to see an active market in the Spring and values rising in 2010