The key to understanding Wilmington, NC short sales is to ask a REALTOR, not a family member. I have had several clients ask about short sales because they thought it was the best way to get a deal. However, that is not necessarily true.
A short sale is simply a piece of real estate that is being sold “short” of the amount owed to the bank holding the lean and is commonly referred to as being “up side down” in your mortgage. For example, if someone buys a home for $150,000 and then decides to sell it after 1 year for $100,000, they would be selling it “short” because they more than likely still owe around $149,000. So they are selling it for $49,000 less than what they owe on it. It is for that reason that people think they are getting a great deal.
Now, the previous scenario is not always a great deal because the real estate market may have gone down and that same property that was worth $150,000 a year ago, is now only worth $100,000 in the eyes of buyers in the market. Yes, that’s right! The buyers in the “market”, who are looking for a home, set the value of every home for sale. That means; if at least 3 homes in your area are similar to yours, and sells for $100,000, then YOUR home is now worth only around $100,000. It does not matter what you bought it for, people are only willing to pay $100,000 for it and if you want to sell it, that is what you should list it for.
So as you see, the short sale property above is not a deal at all. It is only worth the $100,000 you are paying for it. It will only be a deal, if or when the market increases again and people are willing to pay $150,000 for your home. Then, you will be $50,000 richer.