Short sale and foreclosure are two of the most common household words in the last five years. At the start of the real estate bust in 2007, layoff was the first buzzword that plagued the economy. With a small unemployment check and no employment to be found in sight, some homeowners had to choose between survival or keep paying a hefty house payment. A small percentage of homeowners dug into their emergency/life savings to keep making the house payments, hoping to find work soon before their savings run out. A small percentage of homeowners turned to maxing out their credit cards, taking out more credit cards to keep making their house payment; they were desperate to keep their home. No one knows the unemployment rate will continue to climb. No one expected more layoffs, stores closing. Homeowners were losing their homes to foreclosures mainly in the beginning. In the most recent years, homeowners have learned to cooperate with their bank to short sell their homes. Homeowners benefit from staying in their homes longer and banks benefit from having the homeowners maintaining their homes during the short sales. As a result, most banks are offering seller move-out incentive to short sale homeowners in exchange for their cooperation.

Let’s me share two true stories with you.

Story #1: Janis, a Washoe County School District administrator, contacted me in 2008 to short sell her house. Janis’ husband was diagnosed with a brain tumor and was laid to rest in six short months. That did not allow time for her to put her household affairs together. Janis’ single income was not sufficient to maintain a house payment in south Reno and put her daughter through college in UNR. Janis made the difficult decision to short sale her house. Maybe troubles come in pairs: Her son was diagnosed with a muscle problem that needed extensive medical care and frequent medical treatment. Janis switched the focus to her son and took another drastic measure: she declared bankruptcy in order to get rid of a mountain of medical bills her husband left behind. The decision was difficult but a necessary one.  Her short sale was completed in 2009. Two years later, with Janis determined to rebuild her credit with professional credit repair, she was able to secure a FHA home loan on her accord at a low fixed rate. We are happy to report that Janis is now living in an adorable cottage of a house. Her son is much better today and visits often.  Her daughter is pursuing a Ph.D. with full scholarship. Janis shares her lovely yard with three small dogs.  Janis bought her home in January and she calls that her forever home. A happy ending for Janis.

Story #2: Mary bought a move-up home in 2005 with her husband. Her house is located on a corner of a quiet cul-de-sac. There is a neighborhood park nearby where her children meet up with other children from the same schools. Life was good and time stood still. In 2009, the bank where Mary worked, First National Bank of Nevada, was taken over by Mutual of Omaha. Overnight, Mary’s future became uncertain. Mary was laid off shortly after the takeover with many other bank employees. In a bad economy banks were not hiring and eventually her unemployment benefits ran out. In late 2011, her husband also was laid off.   Mary’s family could no longer afford to keep up with the house payment. But Mary is a fighter, she truly enjoyed being a homeowner. She checked into a lease option to buy program and was determined to make it work. When Mary learned about how to qualify for the programs, she quickly landed a great job with promise of a great income. After six short months on the same job, Mary’s family is now in a lease-to-own home. Mary is still living in the same neighborhood, her children are still attending the same school.  

Sometimes you have to get rid of a bad investment to get into a good investment.   Be encouraged if you are thinking about short selling your house, talk to other homeowners who have done the same. One thing is for certain, a new life after short sale may be a better one. 

Annie Christian is a real estate broker and owner of The Annie Christian Real Estate Group. She helps with everything from buying and selling to foreclosure and short sale. To submit a question, call 351-5117. Her website is www.anniechristian.com.