While Foreclosures in Riverside and San Bernardino continue to drag down the housing market, short sales in the Inland Empire have begun to represent a larger portion of home sales. A short sale is a sale where a lender agrees to accept less to pay off a loan that is owed. Banks benefit from short sales by avoiding the costs of marketing and selling a property after foreclosure. Home owners benefit by getting out from under the burden of homes that are no longer worth what is owed. The Riverside Press-Enterprise reports that short sales in Riverside and San Bernardino represent 28% of home sales in the second quarter of 2011, up from 20% of home sales in 2010. Further, short sales result in a nearly 12% discount on the property when compared to average home sale prices.
While short sales may be mutually beneficial, they are not without problems. In many short sales, the process can be long and drawn out for both buyers and sellers. As a result, it is often difficult for average buyers to wait out the sale process. This can be further exacerbated by the fact that home prices can change making a home less desirable should the market take a downturn while waiting for bank approval.
A short sale is a great option for those who can no longer afford a home regardless of payment. For some banks, it may delay a foreclosure sale and make it possible for a homeowner to stay in a property longer. However, a loan modification may be a better option if there are no reasonable rental opportunities. If you are considering the tax ramifictions of a short sale or wondering whether a loan modification is a good option, contact our office today.