Orange County Short Sales
The big banks have settled their difference with the U.S. government over charges of foreclosure mortgage fraud, and the number of foreclosures is on the rise again as lenders tackle an enormous backlog of mortgages that have gone unpaid. Here’s the thing, though. Increasingly, banks and other lenders are allowing people to sell their houses for less than what they owe. The reason for this is that the housing market is slowly heating up again. Demand for homes is starting to build. The banks wisely figure that some money is better than no money. After all, there are costs associated with repossessing a home and then trying to sell it, and banks are not in the real estate business.
Real estate transactions in which homes or other properties are sold for less than what a lender is owed are called short sales.
Delinquent mortgages, bank-owned homes and foreclosures depress the real estate market. Lenders understand this, and are willing to work with homeowners to keep the worst-case scenario of foreclosure from happing when at all possible.
The number of short sales throughout the state of California increased to 21.4 percent in June 2012, up from 20 percent a year ago. In Orange County, however, the number of short sales is down, from 35 percent in June 2011 to 31 percent in June 2012, according to market data from the California Association of Realtors.
Orange County is bucking the California trend because Orange County is a highly desirable place to live.
Who Benefits From an Orange County Short Sale?
Short sales benefit a mortgage holder in a variety of different ways. He or she avoids the foreclosure that can seriously damage a credit report. The mortgage holder is not responsible for carrying the property on the books in the event that nobody actually bids at the short sale auction.
Listing and buying agents will make a profit on a short sale, though it’s likely their commission will be somewhat less than it would have been under normal real estate sale conditions.
Title companies, escrow companies, real estate lawyers and financial managers like tax consultants and accountants all benefit from short sales. That’s because the more irregular a deal is, the more need for high-priced consultants.
The person who really stands to benefit from a short sale, however, is the buyer. In most cases, the buyer is purchasing the property at or below its current market value. His or her monthly mortgage will be less because the loan needed to buy the house will be less. Depending on the assessed value of the property, this may carry over into a decreased property tax burden as well.
The Short Sale Process In Orange County
The first step in the Orange County short sale process is a communication from the mortgage holder to the lender, documenting the hardships that prevent him or her from continuing to make monthly payments, and testifying to the desire to sell. At this point, the lender is free to accept or reject the mortgage holder’s request.
If the request is accepted, the property will be listed for sale. In most cases, the lender will work closely with a local real estate agent to perform an appraisal and market the property. All bids on the property will be forwarded to the lender for consideration. The lender can approve the offer, reject the offer or counter the offer with one that is more acceptable.
Despite the term “short sale,” these types of sales can take as long as 90 days to complete as the offer is reviewed by lender officials at various administrative levels.