NJAR® Encourages Consumers to Explore Short Sales as an Alternative to Foreclosure

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Edison, NJ – February 17, 2009 – (RealEstateRama) – In today’s unsteady economy, many homeowners experiencing financial difficulty have turned to a short sale as a means of avoiding a foreclosure. In many cases, sellers who cannot keep up with their mortgage payments strike a deal with their lender to sell the home and payoff less than the total amount due on the loan. In some cases, the lender forgives the outstanding debt. A short sale can occur in any real estate transaction where the purchase price is less than the amount required to pay off the liens on the real property, such as mortgages, judgments, taxes, homeowner or condominium association fees, assessments, as well as closing costs including but not limited to brokerage commissions, realty transfer fee, and attorney’s fees.

There are key advantages to pursuing a short sale over a foreclosure. Depending on how the lender reports the loan, short sales can appear on your credit report as “pre-foreclosure in redemption,” not as “debt discharged due to foreclosure.” Thus, people who come to an agreement on a short sale with their lender do far less damage to their credit rating than those who go through a foreclosure. Additionally, a benefit to a short sale is that borrowers will generally face a shorter waiting period before they can obtain another mortgage.

“In general, a short sale can be much faster and less expensive than a foreclosure,” said 2009 NJAR® President Diane Dilzell, CRS, e-PRO. “Troubled homeowners should remember that a short sale is not a cure-all but the ramifications are less harmful to their long-term financial well-being.”

Homeowners who are having difficulty making their mortgage payments and who may be considering a short sale must generally meet three qualifying criteria: they must be behind on their payments, be able to prove a legitimate hardship, and have little or no equity in their home.

Sellers should be aware that a short sale is a complex transaction and can take several months to complete. A short sale also requires several parties to come to an agreement on negotiated terms. In addition, different lending institutions have different policies. Some lenders may agree to forgive the difference between what they are owed, while others may require repayment of the deficiency. If your lender “writes off” any portion of the amount owed it may be reported as taxable income. Therefore, sellers should always seek the advice of an attorney or tax professional.

Dilzell noted that a REALTOR® is a valuable resource to home sellers considering a short sale. REALTORS® can help consumers navigate the short sale process, as well as facilitate communication between interested parties.

“REALTORS® don’t just sell houses; we work to help people to afford to stay in their homes. In the end, we want troubled homeowners to know that a foreclosure might not necessarily be their only option. Whether it’s a refinanced loan or a short sale, resources are available to homeowners having difficulty making their payments,” concluded Dilzell.

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The New Jersey Association of REALTORS® is a non-profit organization serving the professional needs of approximately 53,000 REALTOR® and REALTOR-ASSOCIATE® members in the state. REALTOR® is a registered collective membership mark which may be used only by real estate professionals who subscribe to the REALTOR® organization’s strict Code of Ethics and are members of the national, state and local REALTOR® organizations. For more information, please visit www.njar.com.

For media inquiries contact:

Lauren Castellano
Media Coordinator
Phone: (732) 494-4709
Fax: (732) 404-8130
E-mail: lcastellano (at) njar (dot) com

For legislative related media inquiries contact:

Danielle Alpert
Government Relations Coordinator
Phone: (732) 494-4730
Fax: (732) 404-8127
E-mail: dalpert (at) njar (dot) com

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The New Jersey Association of REALTORS® (NJAR®) is a non-profit organization serving the professional needs of its members. It is part of the nation's largest trade organization, the  NATIONAL ASSOCIATION OF REALTORS® (NAR).

NJAR® membership is composed of commercial and residential brokers and salespeople, property managers, appraisers, counselors and other real estate professionals who have pledged to subscribe to a strict Code of Ethics.

Contact:

Lauren Castellano
Media Coordinator
Phone: (732) 494-4709
Fax: (732) 404-8130
E-mail:lcastellano@njar.com

NJAR
295 Pierson Avenue
Edison, NJ 08837    

Phone: (732) 494-5616
Fax:   (732) 494-4723

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