Short Sales Are Ruining the Real Estate Market

It's a great house but I can get a short sale a lot cheaper. That's the phrase we've heard time and time again. It's so frustrating. For those of you who don't know, a short sale is when the homeowner and their lender agree to sell the home for less than what the homeowner owes to avoid foreclosure.

My parents and my wife's parents were never able to own a home, so from day one we made owning our own home a top priority. That's why my wife and I have always been very careful with our finances. We never overextend ourselves or get into a financial situation we can't handle.

In August of 2010 thanks to our careful planning we were fortunate enough to purchase our dream house. Since that time we have been trying to sell our original home. Recently we received an offer for $65,000 below the original listing price. According to our realtor this significantly discounted offer, which we ultimately accepted is thanks in no small part to the amount of short sale properties currently flooding the market.

We can't help but feel that we are being penalized for living within our means. Maybe when we bought our first house we should have taken a bigger loan than we could afford defaulted on it did a short sale and walked away. That seems to be the new American dream, or at least a very popular trend.

Recent figures from the National Association of Realtors show that distressed properties account for more than one third of the real estate transactions in the United States and that figure is projected to rise.

With the projected rise in short sales and distressed properties the prices of homes will most likely continue to fall hurting the people who worked so hard to play by the rules and live responsibly.

You would think the government would reward people like my wife and me but it's actually the other way around. The government sponsored Home Affordable Foreclosure Alternatives (HAFA) program provides qualified participants up to $1,500 towards relocation costs while potentially eliminating the credit consequences associated with foreclosures. This incentive program is actually encouraging homeowners to walk away from their responsibilities by making it easier to enter into a short sale. That just doesn't seem right.

Due to the housing crash that destroyed our economy and the short sale boom the housing market may never fully recover, and that ' s a sad indictment on our entire financial system. Something could and should have been done before the bubble burst.

I know I shouldn't complain, we bought our dream home we're selling our other home and everything will work out. The thing that bothers me though is that people bought houses they knew they couldn't afford, walked away from them with few consequences and hurt a lot of innocent people in the process.

Links to Sources:

http://hafa-program.com

http://www.foreclosureconnections.com/blog/article/2270/foreclosure-short-sales-affecting-home-prices