According to the July 19th issue of The Commercial Appeal, “The foreclosure epidemic in Memphis has slashed property values and drained government coffers.” Local officials stated during a U.S. House of Representatives subcommittee hearing downtown. Even as bleak as this may initially sound, it gives rise to the great opportunities for sellers to cut their losses and buyers to acquire highly-desirable properties at discounted prices.
With record-low interest rates and several choices for financing, buyers and intelligent investors, alike, have profited from the short-sale market over the past few years. It’s true, that short-sales take longer to close, but the payoff can be tremendous for all parties involved.
With a short-sale, sellers are able to unload an over-encumbered property and limit their liability and debt—many times giving them a “fresh start.” Buyers are also able to benefit by buying properties at large discounts to use for personal residences or investment rentals. And yes, even the bank benefits. This is due, in part, to federal laws requiring lenders who take back a property through foreclosure to hold eight time the property’s value in monetary reserves—tying up capital that would otherwise be used to make loans and generate profits.
It’s interesting however, that short-sales, which were once avoided at all costs, are now becoming a more popular way to purchase a home—even for first-time buyers. Due partly, because short-sales that were once rarities are now commonplace. The process has become more streamlined in recent years due to the efforts of buyers, sellers, lenders, and hard-working realtors.
Many sellers, who in the past, may have opted to walk away from their defaulted properties have now began to take more responsibility for their predicament—and work with the lenders, real estate professionals, and buyers to limit their liability through the short-sale option. Buyers need not be afraid of making an offer on a short-sale property—as they once were. Now is a terrific time to acquire a beautiful home at a discounted price.
Any buyer or seller considering the short-sale process should speak with an experienced and reputable real estate professional. A seasoned realtor will be able to guide buyers and sellers, alike, through the many hurdles and complexities associated with the short sales process—a process that can benefit all parties involved.
