Sell Foreclosure

Could your neighbor’s foreclosure affect your ability to resell you home even though you are not personally facing foreclosure?  Maybe. Many homeowners are finding that the large amounts of foreclosures in their neighborhood are having an indirect affect on their ability to resell their home at a profitable price or to break even.

When a mortgage lender has a home appraisal done, the value of that home is determined in part by what similar houses in the community recently sold for.  Unfortunately, many of the homes currently selling on the market are foreclosures and short sales which is pressing down the value of many homes not facing foreclosure:

Roughly 40 percent of all home sales this year were foreclosures or short sales, meaning the property sold for less than the mortgage. In some markets, like Las Vegas and Phoenix, they’ve hit more than 50 percent.

For debtors attempting to get ahead of their financial problems by selling an expensive home, this situation can spell financial disaster which may force them into bankruptcy.  There are many homeowners who once faced with a job loss immediately attempt to sell their home to “stop the financial bleeding” but are unable to do so because of the surrounding foreclosures.  Many try to sale for months or years only to find that the “value” of their home has only further decreased, sometimes more than 30 percent.  These homeowners are faced with no income, a sinking asset and the possibility of a future foreclosure if they are unable to sell in time. Fortunately, bankruptcy can allow them to do a “voluntary foreclosure” or “short sale” while avoiding the pitfalls of a deficiency with the mortgage company or the burden of paying taxes on forgiven debt.