What is a “short sale” property?
In a short sale of a home, a lender allows the property to be sold for less than the total amount due. In many cases, the lender forgives the remaining debt.
During the past several years, there wasn’t any reason for a homeowner to ask his or her bank to forgive the debt, previously, because people facing foreclosure could just list their properties for sale, and the rising real estate market would allow them to get out of owning, no problem.
A slower market and lower prices, of course, put a stop to this idea. Now, homeowners must either ask their banks to forgive their debts, or end up going into foreclosure.
Of course, banks don’t easily forgive your debt, but truth is, they don’t want to take your property into foreclosure either, since that’ll take months and months, with no guarantees of making any money.
So, what about short sales in Massachusetts?
Our local Multiple Listing Service tells us the following:
There are five condos in the local MLS with “short sale” in their description including two in Malden, and one each in Haverhill, East Boston, and Dorchester.
There are 33 single-family homes in the local MLS with “short sale” in their description including homes in Springfield, Plymouth, Worcester, Fitchburg, Ware, Yarmouth, Southbridge, Revere, New Bedford, Shirley, Lynn, Brockton, Taunton, Orange, Webster, Leominster, Somerset, Dudley, East Bridgewater, Northborough, and Concord, MA.
… um, wait, Concord, MA?
The owner listed the single-family home at somewhere north of $1.7 million, a year ago, and it’s down to under $1.4 million, now.
The owner (according to the public record) bought the property in 2000 for $1.25 million, and must have taken out some more loans, because his bank is on his back right now.
I’d say this was more an example of one person’s experience – he seems to have had trouble from the very beginning, again based on the public record. It’s not indicative of a slower market, by any means.
The other properties however, as you can tell, are in lower-income cities and towns, and the owners could be the “victims” of subprime loans, in addition to facing foreclosures.
More: ‘Short Sales’ Rise As Housing Market Cools – By Ruth Simon, The Wall Street Journal Online