Short Sales

A real estate short sale is when the amount due in loans on a property exceeds the amount the property could be sold for.

Know your property value

Your REALTOR® will provide you with an estimate of your home's value in today's market. If you are selling the home yourself you will have to prepare your own market analysis for your property and the surrounding area.

Calculate your Closing Costs

Your REALTOR® will provide you with an estimate of your closing costs. If you are selling your home yourself have your Title company or Real Estate Attorney what your closing cost will be.

Determine how much you owe on your home

Total all of the loans on your property.

Calculation Time

Subtract the total amount you owe on your home from the estimated proceeds for your sale. The higher the positive number the better off you are. However, if this calculation yields a negative number then you have a Short Sale and move on to the next step.

Contact Your Lender(s)

Explain your situation to your bank's customer service department. This will not be their first call of this type. You will most likely be directed to to a specific department that the bank has set up to deal with short sales. Try to talk to a supervisor or manager; they will have more authority, training and experience.

What are Your Lenders Procedures?

This is where you will find a great amount of variance between lenders. Some lenders are willing to work with you to resolve the issue. They may offer to recast the loan with lower payments over a longer time period. They may offer loan forbearance for some time period, adding the missed payments and interest on to the back of the loan. The lender may settle for a reduced amount owed on the loan and allow you to sell the home for less than is owed. Other lenders may tell you the debt is your responsibility, period.

Sell the Home

Keep in mind however, that on certain types of loans the lender may require to make up the difference either by a personal note or thru collection.

Economic Week in Review - February 15, 2008

Trade deficit shrinks, retail sales up
Economic news has been gloomy lately, but this week there were some encouraging signs. Reports showed better-than-expected retail sales and a reduced U.S. trade deficit. Still, in Senate testimony, the Federal Reserve chairman described the economy as "sluggish," and he also left the door open to additional cuts in the federal funds rate. On Wednesday, President George W. Bush signed into law a $168 billion package aimed at stimulating the economy through tax rebates. For the week, the S&P 500 Index rose 1.4% to 1,350 (for a year-to-date total return of –7.8%). The yield of the 10-year U.S. Treasury note rose 12 basis points to 3.76%.

U.S. trade deficit improves
The U.S. trade deficit narrowed 7.0%, to $58.8 billion, in December (from $63.1 billion in November). Analysts had expected a trade deficit of $61.6 billion. Exports rose by $2.2 billion, while imports declined by the same amount. The weakness of the dollar relative to other currencies was credited with helping to cut the trade deficit. For the year, the trade deficit declined by $46.9 billion, or 6.0%.

Retail sales rebound
Retail sales climbed 0.3% in January, recovering from a 0.4% drop in December. Analysts had expected a 0.3% decline. Gas stations had the strongest growth, with sales up 2.0%. Sales of automobiles and parts were up 0.6%. Excluding gasoline and autos, however, sales were unchanged.

Stimulus package enacted, rebates to come
President Bush signed an economic stimulus package that provides tax rebates to millions of households. Many single filers will receive $600, while many married couples will get $1,200. The rebate amounts, however, begin to phase out for individuals with incomes over $75,000 and for married couples with incomes over $150,000. The IRS will start mailing rebate checks in May.

Fed chairman: Further rate cuts possible
In testimony to the Senate Banking Committee on Thursday, Federal Reserve Chairman Ben S. Bernanke said, "Downside risks to growth remain, including the possibilities that the housing market or labor market may deteriorate to an extent beyond that currently anticipated." The Fed is open to further reductions in the federal funds rate "as needed to support growth," he said. Mr. Bernanke also said he expects "a somewhat stronger pace of growth starting later this year" as the effects of the stimulus package and Fed rate cuts take hold. Since September, the Fed has reduced the federal funds rate, which greatly influences the cost of borrowing for consumers and businesses, by 2.25 percentage points.

Business inventories head higher
December's business inventories grew 0.6%, boosted by increases in the manufacturing and wholesale sectors. Retail inventories nudged down 0.1%, fueled by a 1.6% slide in auto inventories. Excluding autos, retail inventories were up 0.7%.

Industrial production ekes out a gain
Industrial production in January inched up 0.1%. Manufacturing sector output was unchanged, while utility output climbed 2.2%. Capacity utilization in the industrial sector was 81.5% compared with the historical average of 81.0%.

The economic week ahead
Next week's reports will include a reading on the outlook for the economy with the release Thursday of The Conference Board's index of leading economic indicators. Also due are the latest reading on the Consumer Price Index (Wednesday), a report on new residential construction (Wednesday), and the minutes from the January meeting of the Federal Open Markets Committee (Wednesday).

Could the bottom be near?

Homeowner's paying $31.8 billion in subprime adjustable-rate mortgages began paying higher interest rates this month. This is the highest amount of subprime ARMs due to reset over a given one month period in this housing cycle. By the end of the year resetting ARMs are forecast to drop to $25.2 billion. By the end of 2008, this number will drop to $3.6 billion.

Interest rate resets have been a big factor in the increased number of defaults this year. As ARM resets reach a peak more homeowners will have trouble meeting payments. Could a record supply of homes for sale, combined with a peak in ARM resets mean the housing market may be near a bottom? Could a market turn up be next?