Whether you are on easy street, just keeping up with the Jones’ or withdrawing savings to stay current, an understanding of real estate short sales and how they affect the value of all homes within our community is becoming more and more important. Hardly a day goes by without at least one person asking me about the implications of short sales-either in terms of how it affects them as a home seller, or what it means to them as a buyer looking for a great opportunity.For that reason, I have decided to proactively communicate some basic information about short sales as well as provide everyone with access to The Four R’s of Short Sales, a publication offered by the Top 5 in Real Estate Network®, of which I am a member.

Accounts of distressed, or so called “under water” properties, seem to be a daily occurrence. The term “under water” was coined to describe the condition of the outstanding balance of a mortgage exceeding the market value of the home. If a property is under water but the homeowner is current with their mortgage, the situation is of less consequence. If a homeowner stops paying their mortgage, however, lenders have little option but to act. This can result in the forced sale of the property.

When a mortgage lender enables the sale of a property for an amount less than the mortgage balance, this is a “short sale.” The problem is, the lower prices that short sales generally command on the market can negatively affect the value of other properties in our community…including yours and mine!

This is why I believe that greater transparency is needed in order to fully understand short sales. Homeowners facing financial challenges need to have a better understanding of their many, and in some cases better, alternatives. Moreover, all parties involved in a short sale will benefit from knowing the perspective and motivation of the other participants associated with the transaction.