Foreclosure and Short Sales News

Not along ago, few people had even heard of a short sale, which occurs when the bank agrees to discount the loan balance for a seller who owes more on his mortgage than the home is currently worth.

If you are in the market for a home today, you are almost guaranteed to be looking at some short sales. Nationwide, 14% of homeowners are currently underwater on their mortgages, calculates real estate website Zillow.com. In many areas, it is far more: In some areas, over half of homeowners would owe more than their home is worth if they sold today.

The good news is that short sellers are likely to still be living in the home and may even be current on their payments. That means these are not the distressed, run-down properties that you often find among foreclosures. In fact, there is a good chance that some of the most deluxe homes for sale in your market are facing foreclosure.

Before you get too excited about buying a short sale, know that they generally are not short. For the sale to go through, the seller’s lender must approve the price and agree to take a loss. That extra step can cause the process to drag on three times as long as a normal home sale.

The key to snagging a good deal is knowing how to avoid the land mines.

Read More about how to Snag a great deal on a short sale at Money Magazine

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Jim Hutchinson manages Short Sale Holdings, a short sales processing company that helps home owners prevent foreclosure and real estate investors get through the short sale process.

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