Wouldn’t the only difference be that he would have a house worth less than his mortgage? If so, if he scrimped and saved and bought a house within his means, he’d be doing what we all did the last time the housing market crashed - paid our mortgage each month and waited until things started up again. The only people in trouble now are those that bought more house than they could afford, due to “creative financing”, right?
Not quite. I’m going to use myself as an example. We have a completely stodgy 30-year fixed loan, boringly traditional 20% down (although we have little more equity now), and a payment that is well within our means. We also have quite a lot in savings, retirement, and other investments. However, in this market our mortgage is upside down.
Suppose we got hit by a major illness last winter that (even with health insurance - don’t even get me started!) wiped us out by this time of year. The responsible thing would be to downsize. However, we would have to attempt a short sale. We’re upside down.
I just came back in to see if EP punished me again (he was kind this time; thanks Euphonious) but I am curious how you simulatneously have “a little more equity” and are “upside down.” Don’t bother teaching me, as I tend to be uneducable. It just struck me as odd. I don’t really understand how people think in this market, I guess…I have only seen the term “equity”(in one’s house) used to mean the residual difference between a home’s net value upon being sold and its mortgage.
I thought rivulus meant that by making mortgage payments they attained a little more equity than the original 20%, and then went upside-down when the market collapsed. But that’s just my guess.
OK, to clarify, we had a little more equity than the original 20% before the housing market went bust. Nice to see Chief Pedant is living up to his handle.
Chief, I get what you are saying: don’t shop for short sale homes. Yes, we have that option. The problem is the vast majority of homes in Orange County are short sales, whether at the $350,000 or $2,000,000 price points.
I should have posted this in MPSIMS rather than the pit. Either there or here toofs says fuck short sales. For all the reasons everyone posted.
I appreciate all the comments from everyone, even the guy who called me a wanker or somehing.
Which is where my husband and I were during the last time the bottom dropped out of the housing market. But because we had that insurance, savings and other investments, even if we had been hit with some major issue I cannot see that we would have been forced to short sell the house. The only thing that would have forced us to sell would have been if we had both lost our jobs for over a year. How often are all of these short sells being caused by something like that?
Particularly - hey toofs! - in Orange County?
I’m not saying that at all. I’m saying there is no requirement to shop for short sale homes, and that even if you don’t want to deal with the short sales they still help you because they depress real estate which is not being sold short.
Like any deal, short sales can be a hassle and only the buyer is in a position to decide if it’s worth it for them. But the opposite end of the spectrum is a seller’s market, and as a buyer you have chosen the better of the two timings.
Realtors are one of those species where, when you find a good one, you should make sure to take down her contact information and pass it to everybody you know plus their parents, children, neighbors, your PTA, their PTAs and the local Rotary chapter.
Yes, you’re on commision. But if you try to get me to buy something that’s twice what I’ve told you I can afford, your commision will be zero. Zero is not a good number, when it refers to your income. Promise. If you don’t have any current listings matching my requirements, it’s both more efficient and more elegant to say so, ask for my contact information and give me a business card.
I’d been looking at flats for several days when I saw an ad for a “self-sale” which ended up being what I bought. No fuss, no hassle, the registrar found it hilarious that whenever he asked a question the seller and I would answer in stereo (apparently most people do crap like trying to change the price while at the registrar, with both the mortgage and the sale contract already on the table). The only negative point of my flat is the lack of a lift, which means that if I ever break a leg I’ll need to phone in my shopping and get totally antsy from not being able to get out of the house (hyperventilates). May your experience end up being as good as mine, toofs!
If you’ve ever watched Property Virgins, you have seen that a lot of people, especially first-time buyers, have unrealistic expectations about what they can get in their price range. That might be the problem, if a realtor is constantly showing you stuff way outside your price range.
Or the realtor might only be concerned with making more money for him/herself, and doesn’t care if you end up house-poor.
That is exactly my point.
Thank you.
I can agree with this.
If you look back, my post was responding to your statement that:
Note that your statement contains the word “only.” I was explaining that there are some circumstances where people who do not have “creative financing” can end up having to attempt a short sale. Is that clear enough for you? And, guess what? One major illness with the loss of the primary wage earner actually can wipe out a family over the span of a year. Even one with savings.
(Ah, screw it. My bad. I should have checked who I was responding to. Nothing I can say will penetrate curlcoat’s cloud of self-righteousness. So I’m quitting before I waste any more time.)
If you look back, I was asking about what is actually happening out there, not what scenarios you can think up to justify universal healthcare.
Asshole.
I hope you have a lovely Christmas season, and nobody manages to drop a house on your sister.
I am and shall have a lovely Christmas season, and I don’t have and have never had a sister.
rivulus is still an asshole.
Ah, my mistake, I had you confused with someone else…
I then wish you and everyone else in Eastwick a pleasant holiday.
I can vouch for the OP’s “fuck short sales” sentiment. My wife and I are a week away from closing on our first house and we had a hell of a time finding a reasonable home within our price range that wasn’t a short sale. It’s not much better on the west coast, roughly 80-90% of the available homes in our price range were short sales. We finally ended up in a three-way bid for a foreclosed home and ended up paying slightly over the listed price for it.
Since we started looking for homes I have come to the conclusion that this “buyer’s market” is total bullshit. Buying a short sale might be a reasonable way to get into a second house or an investment property, but it’s unrealistic to think that people wanting a primary residence are going to wait around for months and have their chains jerked around before they even know if their offer was accepted or if there is even a chance of closing the deal. Of the few non-short sales that we looked at, nearly all had bids pending and most had only been on the market for a few weeks- pretty much exactly the opposite of a buyer’s market. This was mainly for first time homes in the sub-220k range, btw.
MY interpretation is that it’s a group clusterfuck that lingers from the inflated housing prices and both groups, the underwater sellers and the banks, are in denial about reality and neither group is either willing or able to eat crow. I feel the resentment at ‘the system’ that brought this on also, since I was also someone who has rented for the last 10 years while I busted my ass working and saving to have a reasonable 25% down payment, only to be submarined by rejects who thought they could get something for nothing and the retard banks who encouraged them to do it (I know some people ended up there by means beyond their control, but they are the minority).
I just can’t decide who I would rather see fucked over- should the banks punish the homeowners for making bad decisions and just foreclose and evict them or should the homeowners just light the whole shebang on fire and give the banks the middle finger as they walk away? Maybe if they did both I would be happy.
One last thing- it ain’t like the house bubble popped yesterday. How hard is it to hire a couple of people and train them to read paperwork and push pencils to get these things moving? From my understanding, it’s not rocket science, it’s just that the banks don’t care and aren’t willing to do anything but the bare minimum.
Short sales are a pain for buyers because the defaulting owners are still in them with motivation to stay rent free as long as possible and with banks having hundreds of these on their books along with a number already foreclosed on. They have little incentive to make a decision, particularly if there is a second mortgage held by a different lender who is going to be wiped out totally, they have no incentive to move fast unless the first offers them cash, which the first will not do in most instances, and if they do, the second will they delay it hoping for more.
A better bet is bank owned (already foreclosed) properties. They are anxious to get rid of these properties and can do so on a few days notice. But if you are getting involved with a short sale, make sure there is only one lender to deal with and that your agent and the selling agent are experienced and motivated to close short sales.