How Short Sales can help Homeowners
Andrew Gomes wrote an excellent article in the Honolulu Advertiser Sunday explaining short sales and how they can help homeowners avoid bankruptcy. Hawaii Kai has not been hit as hard as many other communities on Oahu by the foreclosure problems, but there are still owners here who are having problems paying their mortgages.
Gomes explains, "Such sales — where a home is sold for less than a seller's mortgage and the deficiency is forgiven — are helping dramatically higher numbers of financially-struggling homeowners avoid credit-wrecking foreclosure. The transactions are also providing good deals for buyers, helping lenders minimize loan losses and reducing the number of vacant foreclosed homes that can negatively affect neighborhoods."
Traditionally, the Hawaii housing market has been more stable than the mainland, and the lenders more conservative. But "In 2006, there were 13 short sales on O'ahu, followed by a modest rise to 47 the next year, according to an analysis by Coldwell Banker Pacific Properties. Last year, buyers purchased 194 short-sale homes. Last week, there were close to 500 homes listed for sale on O'ahu as short sales, representing about 9 percent of the inventory, or one out of every 11 homes on the market."
Gomes states that about 1/4 of all short sale listings are in the 'Ewa Plain, but even owners of mansions in Kahala are not immune to mortgage problems. The biggest upside for buyers is getting a home from a seller and lender that, compared with an ordinary seller, are often more motivated to sell at an attractive price, perhaps below market value. However, he says that "Since January, median sale prices of O'ahu single-family homes and condominiums have been down almost 10 percent, after no change last year for condos and a 3 percent dip for single-family homes. Combined with severe job and wage reductions, the weakening real estate market continues to push more homeowners toward foreclosure."
The short sale remains a long and complicated process. It also isn't for all homeowners wanting to get out of a mortgage, and isn't the first priority for lenders trying to avoid foreclosing on a home. Short sales generally aren't appropriate for investors or owner-occupant homeowners who have other significant assets. You actually have to prove hardship. President Obama's mortgage relief plan offers another option for homeowners in trouble, those who may want to modify their loan terms.
The main point is to study your options and get help, if you are financially strapped. Don't wait until the bank starts foreclosure proceedings - this doesn't help you or the bank. Contact me for information about what you can do, and read the full article in the Advertiser.
Barbara Abe, Realtor
barbara@barbarashawaii.com
808-226-2537