Friday, October 31, 2008
I thought I was on top of what was happening in the real estate market, but yesterday I learned I was ignorant of what is probably one of the most significant trends sweeping the real estate market in the past year: the short sale. Instead of foreclosure, homeowners who find themselves under water on their mortgage (i.e., they owe more than their home is worth) may be able to convince their bank to agree to a short sale. The bank agrees to accept the proceeds of the sale and may then consider the debt to be satisfied. This avoids the messiness of foreclosures or evictions, and may allow the borrower to avoid a blotch on his or her credit history. If done right, it can be a win-win for all concerned, mitigating the misfortune of losing one's home. Another benefit is that these sales are going on all over the place, and they don't require any government bailout money. It's the private sector's answer to the problem of falling home prices.
Posted by Scott Grannis at 11:07 AM