Short Sale Is Only One of Several Options

My wife and I bought our first home in 1989.  That was a banner year for real estate – in more ways than one.  The real estate market had experienced appreciation of close to 20% each year during the previous five years.  As a result, we paid almost exactly double the price that our seller had paid five years earlier.

This got my attention.  We’d paid more than we could afford at the time, and the monthly loan payments were a real challenge.  But given the rapid increase in prices I’d seen over the preceding years, I figured that if we needed to get out, then we’d sell at a profit.  Little did I anticipate that we’d hold the house for 7 years, do many improvements, and then sell at a loss.

For many years afterwards I’d mention to friends and acquaintances that we had lost money in the California real estate market.  Nobody could believe it.  All around us prices were escalating ever upwards, and the thought of losing money in real estate seemed like an impossibility.  I was the only person I knew of who had lost money in the California real estate market.

Fast forward to 2010.  I’ve been practicing real estate law now for over 20 years.  My first foreclosure matters were in 1987, and after that I hadn’t really worked on any for close to 15 years.  And then the market turned downwards.   I now consult on short sale and foreclosure matters on nearly a daily basis.  The white-hot appreciation of five years ago is gone, and homeowners are just trying to find out the best way to walk away from their homes – with most of them experiencing substantial loss.  It’s a difficult time.

It’s difficult to work on scraping together a down payment, then experience the excitement of moving into a new home, and make improvements only to find out years later that the home is worth half of what you paid for it.  Some homeowners choose to stay in their homes even in these situations.  But other homeowners are transferred in their jobs or they experience employment setbacks.  These owners have limited options with respect to their homes.

Many people are of the opinion that the best way to walk away from their home is through a short sale.  But that’s not always the case.  Liability issues can linger after a short sale – even though homeowners may believe that they are done with the property once it’s sold.

Mortgage, short sale and foreclosure law is complex.  These subjects involve complicated tax and liability issues.  Sometimes the best approach for a homeowner in distress is to short sale a property, but other times foreclosure is a far better option.  Bankruptcy is the best option for some owners.

Because of the complex issues and law involved, homeowners are prudent when they seek competent, qualified, experienced tax and legal advice.

Copyright 2017 ROBERT B. JACOBS