Since 2004, homes purchased or that underwent a cash out refinance could be underwater: the current market value of the home is less than what is owed. This causes a significant dilemma for a homeowner as they may need to, or wish to, sell their house, but cannot afford to bring cash to the closing to make up the difference, or in a more direct term, the loss. 

Over the past number of years, many homes have faced the Foreclosure process and property values have decreased dramatically. Homes in the Greater Tampa Bay Area have lost approximately 50% of their peak value. Many people purchased property during this time frame in order to take advantage of an appreciating market with attractive interest rates and finance terms or in order to play “Investor” by speculating that the market value would continue to rise. The problems arose when introductory interest rates changed and increased, causing many people to simply default on their loan as they were unable to sell their property in time or for enough to cover the value of their loan. 

After about 5 years of property devaluation, other economic factors have contributed to further decrease in values across the country and many homes are still facing a potential Foreclosure (over 8 million are still underwater) in the near future. Coupled with stringent lending guidelines, the market still faces a significant uphill battle to turn itself around and industry analysts believe that the Housing Crisis will become a Housing Collapse, with even more homeowners defaulting on their mortgage payments and the number of additional Foreclosures rising by more than 50%.

The best method used in the Real Estate Industry to avert a potential Foreclosure is a Short Sale. In fact, the Federal Government has gone on record stating that a Short Sale is the best alternative.

What is a Short Sale: Definition?

A short sale occurs when the homeowner sells his/her house for less than what is owed on the property.  The lender in turn takes a loss on the loan and agrees to accept the purchase price to settle the debt. The lender is not obligated to accept an offer to purchase.

Short sales are beneficial to the lender as they do not have to go through the process of foreclosing on the property. This reduces costs for both the lender and the homeowner. The lender does not have to take title, secure, manage and eventually sell the property.

Why Do Sellers Need a Short Sale?

Many homeowners have financial or life issues that occur and as a result, they are no longer able to maintain a current mortgage payment.Some examples of what can cause a homeowner to fall behind on their mortgage payments are as follows:

Job Loss        
Job Relocation
Reduction in Salary/Wages or Hours
Damage to Home    
Market Value Loss
Unable to Rent    
Natural Disaster
Poor Investment

Are Short Sales Better Than Letting It Go To Foreclosure?

Short Sales are a much better alternative to a Foreclosure. It is advised that a homeowner speak with a Foreclosure Defense Attorney and/or their CPA to determine the best solution for their specific situation. 

The income, assets and type of property (primary, second home or investment) will come into play with respect to a Seller’s future financial liability after a Short Sale has been completed. 

Short Sales provide greater benefits to the homeowner with respect to the following items:

1.    Credit Score and Credit History
2.    Deficiency Judgment
3.    Time required to move to a new location
4.    Future Borrowing Ability
5.    Current and Future Employment
6.    Loan Application Questions
7.    Security Clearance  

WestBay prides itself as being Short Sale experts and can implement a "Seller First" Short Sale system that is designed to mitigate the issues for the Homeowner and reduce their debt obligations as best as possible.


Please contact WestBay for more information.