Short Sales in Scottsdale Real Estate Market

Although there are fewer short sales in the real estate markets of Scottsdale Arizona than in Greater Phoenix AZ real estate, the short sale does have its place.  Second homes and vacation homes in Scottsdale and other resort areas are the first to go when property owners face economic crisis.  Short sales, for some people, are a better option than allowing their homes in Scottsdale or Phoenix to go into foreclosure.  However, short sales affect FICO scores the same way as foreclosures do.

What is a short sale?  Short sales allow buyers to purchase homes in pre-foreclosure for less than the mortgage balance on those properties.  Any lender that accepts a short sale will lose money and they are in business to make money.  Therefore, short sales require the distressed property owners to meet strict qualifications.

To begin with, a lender will only accept a short sale if the homeowner (seller) is facing extreme economic hardship.  Mortgages must be in a default status or approaching default.  If payments are current, other factors must be in play.  Sellers must be facing difficulties caused by situations such as medical emergencies, divorce, death, bankruptcy, or unemployment.

Lenders who will be agreeing to lose money have no sympathy for sellers who have financial problems because they went on a spending spree, made poor decisions, or simply want to move to another neighborhood.

Sellers must be willing to allow the lenders to scrutinize their finances.  Sellers must disclose assets, such as savings accounts, stocks, bonds, IRAs, and other real property.  Depending on the overall scenario, lenders may allow shorts sales in spite of asset strength or they may require the seller to pay back the shortfall sometime in the future.  The government also likes to get involved at times.  Some states tax the debt forgiveness, requiring lenders to issue 1099 forms for the shortfall that they absorb.

Next, sellers must prove that the home is worth less than the unpaid balance plus penalties.  Real estate agents can assist by providing stats from comparable sales to prove that the value of the property has dropped.

Another dealmaker is that sellers must have one or more offers on their properties before lenders will consider the short sales.  Finally, lenders must accept the buyers’ offers.

For more information about luxury real estate in the area, contact LUXE Real Estate Group at 1-888-900-LUXE.