More New Jersey Homeowners Turn to Short Sales [AUDIO]
More and more homeowners in New Jersey are opting against foreclosure and turning to the short sale instead.
In fact, the number of people selling their homes for less than what they owe is going up. "In New Jersey, anywhere from six to eight of every ten sales are distressed properties, or properties that are upside down in value," said Amber Noble-Garland, New Jersey Real Estate Agent and Distressed Property Expert.
While short sales can be a problem, they are also part of the solution. "If houses just sit on the market and don't sell because they aren't priced in accordance with where the true market value is, that leads to a bigger problem," said Noble-Garland. "To potential buyers, the homes look undesirable and sellers are constantly forced to drop the prices. That further presents a problem in terms of market value."
"By selling your home through a short sale, you remove a surplus of inventory that's just sitting on the market. That way, new inventory can be brought in and it may not be as distressed," said Noble-Garland. "People who don't have negative equity in their homes can then sell them at prices and values that are a bit higher and that could help to correct the problem. If none of the inventory is moving and everyone is at a stalemate, there's a bigger problem being created."
"If we can create a greater level of interest from buyers, then we can get rid of old inventory, move in new inventory and create better supply and demand, thus bringing the home values up," she said.
Banks also are showing signs of being more open and willing to approve the deals even if it means accepting less money. Typically, banks get about 20 percent less for a foreclosed home. Foreclosure can take years to unload, during which other expenses grow. One of the biggest problems with short sales has been the time it takes to get the deals approved. But, new rules are going into effect June 1 that will require lenders to make a decision about short sale requests within 60 days.