It’s been six months since short sales were discussed here. (What Is A Short Sale? and Buying A Short Sale Property). There have been some significant changes with regard to these kinds of transactions. One of the most important changes came through the Taxpayer Relief Act of 2007, which relieved people who had their properties foreclosed upon, deeded back to the lender or sold for less than was owned on the mortgages from having to pay taxes on the difference between the sale amount and the amount of the loan.
How does a short sale affect credit? This question has been answered by the way lenders are responding. Generally, a prospective borrower who has sold a property for less than was owned on it, has lost a house through foreclosure or has signed a deed in lieu of foreclosure will not be able to qualify for a new mortgage for two years.
How successful have sellers been in selling their houses for less than is owed on them? The numbers are interesting. There are currently 4926 properties listed for sale in Clark County as short sales. Since January 1, 2007, there have 796 sales of short sale properties. Almost half of those have occurred since January 1, 2008. We’ll be watching these numbers closely because if they continue to rise, this will indicate lenders are becoming willing to negotiate these sales.
For buyers, short sales have been a source of great frustration. Offers made may take up to 12 weeks to receive a response and, as the figures indicate, may very well be rejected. As a result after attempting to purchase a short sale property, many buyers are staying away from these listings. Again, should the numbers of successful short sales continue to rise, this may become a viable option for the buyer who does not want to spend a lot of time waiting.