The Short Sale Boom

The short sale boom of 2010 was no surprise, and our country started off the year with more than 29% of sales ending as a short sale. It may not sound like a lot, but the number is going back up from when it actually decreased in July of 2009.

The short sale boom happened in January of 2009, when it had peaked at 32%. It seems that our short sales go up in January, and we might consider if there is a trend here. Whether its related to after the holidays or not is left up for discussion, but it’s certainly disheartening when you begin your year with a short sale.

The short sale is a transaction that takes place without a bidding war, whereas the process for buying a home with a seller and buyer is more personal. Naturally, the short sales are having a higher impact on the prices of homes, which leaves many discouraged when listing their home. Just because there is a short sale boom, it doesn’t mean that traditional home sales stop, but they are still affected. Let me explain.

Because short sales are sold for less than what is owed on the home, it typically ends up being a number that is less than the home is valued at. When this happens continuously, it’s a real problem, thus driving down home values in even the best of neighborhoods. Everyone is truly affected by this short sale boom, and I cannot say when we might see it come to a close.

Until that time comes, the best we can do is educate borrowers and first time home buyers, hoping that everyone sees the need for change. We need good guidelines, and we need people to be responsible. Everyone, borrower and lender should be held accountable for their own actions. We as consumers need to pay our bills, and when we can’t we need to communicate that to those we owe. We are all consumers, everyday and none of us are exempt. When we are in a position dealing with credit and finances of others, we need to treat them the way that we would want to be treated. We should be respecting where that consumer is coming from, and it makes no difference what neighborhood they live in or how much they make.

No loan should be too big or too small for us to want to help someone. We are all in this together, and we need to approach this as a joint effort. Until we do that, we will be where we are right now, not moving an inch. There is so much power in teams, and we recognized that as kids playing sports but we have somehow forgotten that.