Short Sales on Long Island

There has been a recent development in the Long Island marketplace that hasn't been seen here in a very long time. That development is called a "Short Sale" and that is the technical term that real estate and banking professionals use when describing what happens when a homeowner is in foreclosure and they can not sell their home for what they owe the bank. The reason this phenomenon is relatively new is that instead of home prices rapidly appreciating as they have done consistantly for the past 10 years they have now begun to depreciate. Let's say you bought your home at the height of the market last spring and paid $500,000 for it. In order to keep your payments affordable you took out an interest only mortgage and have been making the minimum payments ever since. Let's also say you availed yourself of 100% financing. Here you are 10 months later and you now owe $506,000 on your home. For some reason your financial situation has worsened and you can no longer afford to make even the minimum payments on your mortgage so you decide to sell your home so your credit does not spiral further downward. Guess what? Your home is no longer worth $500,000 it's now worth $475,000 and you still owe at least $506,000. You are now faced with some very ugly choices. You can pack up all your bags and leave while the bank forecloses or you can hire a professional real estate agent who has experience in "short sales" and will negotiate directly with the bank on your behalf. The "short Sale" will at least preserve your credit and may even allow you to walk away with a drop of money and your dignity more or less intact. The lesson to be learned from all of this is that you really should try not to get in over your head when you are looking to buy a home. Stick to your budget. Be realistic about your income. Keep some money tucked away for an emergency. Hire an exclusive buyers agent to negotiate the lowest possible price and best terms on your purchase so that at least you are not overpaying from the get go. Use an honest mortgage consultant who comes recommended and advises you properly. Make sure you get a home inspection report so that you can budget for expenses like a new roof or new windows. Know what you are getting yourself into before you do something foolish like buy the house next door to where you live just because you think you are getting a good deal. I have seen this kind of good deal completely backfire on the buyer because more often than not, the house next door is not a good deal. Know what you are buying and know what it is really worth. The last thing you want to become is a foreclosure statistic.