So Many Short Sales in Metro Phoenix, What's up?

I heard all these reports about the adjustable rate mortgages and how they would be such a problem. I thought I was so smart and justified in my mind how they would refinance or sell their home when the adjustments occurred. I did not understand why others were making such a stink about it, until NOW. Now we are looking at a flood of foreclosures and short sales for the near future. I have seen 8 to 10 forecloses in McDowell Mountain Ranch and even some in DC Ranch.

What is causing these issues? This stems from all the irresponsible mortgages made over the past few years. Many home owners bought with 100% financing and now can't refinance. Some are looking at 25% jumps in the their mortgage payment, the one they barely qualified for 2 years ago. Borrowers expected their home to appreciate so they can refinance into a new mortgage. Many of these borrowers are not sub prime as all the hype in the news. But they are regular A paper borrowers, just caught up in a market cycle.

Why so many? There are many reasons. The top reason is as mentioned, folks bought expecting to refinance their mortgages before they reset to a payment they cannot afford. They next issue is that home values are dropping, in some cases 30 to 40%. So, regular good credit borrowers are looking at 5 or more years of a huge payments just to get back to break even or get out now. Many are choosing to get it over now versus suffering and failing. People are always moving due to work, family, illness, divorce, death etc... For years, refinancing and pulling out the equity has been rampant. These issues are causing more and more people to default on their mortgage.

What to do, when you cannot afford the payment? Contact a good professional Realtor. One experienced and certified in Short Sales. Start the process with the bank. Your Realtor can help you with this presentation. List your home for sale with a Realtor that is an aggressive marketer. Get it sold and have your Realtor negotiate the Short Sale. Then move on with your life and be happy you do not have a foreclosure on your record. By the way, I am certified in Short Sales and have sold several recently. I am also an aggressive marketer.

I am not in this situation, how does it affect me? Basically we are back to a couple fundamentals. First, supply and demand. This situation adds more supply to the market, thus more pressure on values. Short Sales are usually very aggressive and drive values down. The good thing about Short Sales is they are better than foreclosures. You don't have the abandoned houses. Foreclosures are usually in worse condition than Short Sale homes. Foreclosures drive the prices down more due to their condition.

If you know anyone fearing the loss of their home. Please send us their name, address and email address. We can help them sell their home. Selling their home before foreclosure will help them, their neighborhood and our market. In some cases, we can sell their home without destroying their credit. Our market, as with all real estate markets, will make it through this cycyle.