You Want to Sell Short? Really!?!

He told me that his hours at work had been cut back, so he did not think he…

He told me that his hours at work had been cut back, so he did not think he could keep paying the mortgage. He was pretty certain that the house would not sell for enough to cover his debt. So he would rather “let the house go”, and rent something more affordable… get his financial feet back underneath him. I can understand his thinking, but a further conversation revealed that there was so much Nathan was unaware of about the impact this plan would actually have on his financial life. And he also did not know that he had another option.

When we discussed how we could lease the property and how he could earn a positive cash flow, he was immediately sold. So just what was it that he would have given up had he gone with the short-sale?

His credit rating would have been destroyed for at least 3 years. (Currently, HUD allows home-loan borrowers to qualify after 3 years from the closing on a short-sale.)
He would have lost the tax benefits of holding investment real estate in his portfolio.
He would have forsaken the likelihood of property value appreciation in the out-years.
He would have lost the positive effect of loan amortization which would increase his equity in the property.
He may be strapped with a default judgment that would hang over his head for many years.
If the short-sale was ultimately disapproved (about an 80% probability), the property would have been foreclosed on. (His credit rating would suffer equally under foreclosure as in a short sale, but the negative affect would have just lasted longer.)

Essential to the above solution is for a homeowner to get help before letting the house payments go into arrears. Once the homeowner starts getting buried beneath the debt, it is very difficult to get out from underneath. Sometimes, selling short is unavoidable though, and that will be the subject my next blog.

Please give 3 Options Realty a call and schedule professional property managers in Roswell, GA.

Daniel R. Wilhelm
Managing Broker
3 Options Realty, LLC.
http://www.3optionsrealty.com
678-397-1282

Our Services

Our Guarantee

3 Options Realty is committed to providing Georgia's best property management services. But in the unlikely event that a landlord…
Read More
Owner Protection & Income Sability

At 3 Options Realty, we…
Read More
Property Management

Are you struggling to maintain multiple rental properties? Have you recently purchased your first real estate investment, but are feeling overwhelmed…
Read More
The 3 Options Realty Difference

Most property management companies are designed around the departmental organizational structure. 3 Options Realty is much different and there are…
Read More