Pasadena, CA - there's a lot of talk about Pasadena"short sales" and foreclosures lately. It's in the news. Books are being published about short sales. There are even radio commercials talking about short sales.
I think most people have a pretty good idea what a foreclosure is, but there's still quite a bit of confusion on what a short sale is.
A short sale simply means that a bank is willing to accept less money than what the owner owes on the property because the house can not sell at a price high enough to cover the mortgage fully.
Here is a quick example:
Home was purchased for $500,000
1st and 2nd Trust Deed (mortgage) is $495,000
House is now worth $450,000
Bank agrees to accept $450,000 less expenses in leu of the full amount owed $495,000
Why would a bank agree to accept less than what is owed?
To avoid the costs and a lengthy process of foreclosure and further loss of home value.
Why would a Pasadena seller consider putting their Pasadena home on the market as a short sale?
In essence, you sell the house for whatever you can get and the lender agrees not to go after you for the deficit that is owed on the property. Even though your credit might be affected, it will not be to the same extent as a foreclosure.
Also the Mortgage Forgiveness Debt Relief Act of 2007 amends the IRS code to exclude from gross income amounts attributable to a discharge of the debt incurred to acquire a principal residence.
READ MORE: Short Sale Deficiency Protection Extended
A short sale doesn't mean that it's a fast sale.
It's actually more of a long sale meaning it takes on average 3 to 5 months (depending on the bank) to close escrow on a short sale.
Why should Pasadena buyers consider short sales if it takes such a long time?
Simply said - to get a better deal.
There are not too many short sales homes available at this time in Pasadena. There are many Pasadena homes that are regular sales which are certainly worth exploring and you can also get a great deal without the hassle of a long wait and too much uncertainty!
REQUIRED READING: Pasadena Real Estate Guide - Everything You Need to Know about Buying Your Next Home!
READ MORE: Pasadena real estate update 2012 – see luxury home sales.
Irina is a Top Realtor and the founder and President of Pasadena Views Real Estate Team™. She is available to assist you in all of your Real Estate transactions. Email or call her today at (626)629-8439.
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