Cincinnati Real Estate: Short Sales

Cincinnati Real Estate: Short Sales

The Cincinnati Enquirer ran an article today on the rising number of short sales occurring in the current real estate market. Short sales are transactions that occur when a bank or lender agrees to accept less than what's owed on a home loan to avoid foreclosure.

Why would a seller consider a short sale in lieu of a foreclosure? Although it is still damaging to a seller's credit and can drop their credit score by as much as 300 points, it can be preferable to try to settle with the lender without incurring the substantial carrying costs and legal fees for the lien holders and property owner while properties move through the foreclosure process which can take multiple months. Fannie Mae recently adjusted their guidelines to dictate only a two year waiting period for a short sale seller to buy another primary residence, while they extended the waiting period for foreclosures to five years.

For buyers short sales can be a good opportunity to purchase a home for below market prices. These homes are less likely than foreclosures to be distressed because the homeowners is still occupying the property. Buyers beware that while there are great deals to be had, the short sale process can be long and frustrating. Some properties can take several months to close due to the number of parties involved.

If you are experiencing financial hardship, live in the Cincinnati area, and are considering a short sale or foreclosure of your home, please discuss your options with your accountant or attorney prior to making the decision to short sell or foreclose. If you need recommendations of professionals in the Cincinnati area, please contact me.