When most people think of “walking away” from their home, many people just assume that the home will go into foreclosure.
And plenty of times, it does.
But not always.
I have heard (and seen) many people make the independent decision where their home was worth significantly less than they owed — who could afford to keep making the payments — to hire a real estate agent and short sell their home.
And I have seen lenders approve a short sale in this situation.
Consider this piece on 60 Minutes recently ran about “Strategic Defaults” right here in Arizona:
One thing that they didn’t cover that I have seen right here in Arizona is this:
If you find yourself in the position where you owe significantly more than your home is worth, and you can afford to make your payments — there is no rush to make a decision. You will probably be in this situation for years to come.
Think about it.
Let’s say that you bought your house for $200k in 2006 and it is now worth $100k. You can afford to make your payment and you continue to do so.
For the next five years.
And then you get transferred because you were promoted.
So, when it comes to sell your house in five years your home is then worth $125k.
If that scenario plays out as I just illustrated (totally made up scenario), then you would have effectively made a $200k payment on a $100k house for five years and then ended up short selling it.
I wonder why they didn’t mention that.
About the Author:Justin McHood calls himself a “Mortgage Commentator” and works for Academy Mortgage Corporation. You can find his loan officers at Ten Day Close and read more of his thoughts on the mortgage business on Zillow’s Mortgages Unzipped Blog. You can also find him at most East Valley Friday Nights gatherings. He’s the one in the blue shirt.
Looking for more information on short sales? Below is a link to all articles written on this site about short sales:
Phoenix Short Sales
Thinking about short selling your Phoenix home?
Just complete the form below for a no cost, no obligation consultation with one of our experienced short sale experts: