When you first purchased your home you probably never thought that you would one day need to come out of pocket or short sale your Orlando home to get it sold.
No homeowner ever buys a home thinking that one day their home will have no equity or worse yet, it will be worth less than the unpaid mortgage amount. The truth is most homeowners buy believing that their home will increase in value. Most of us were brought up being told that buying Orlando real estate is a foolproof investment and you’re guaranteed to make money when you sell your house.
There are never any guarantees that you will be provided a return on your Orlando real estate investment. Although some homeowners are in the position to sell their homes at a nice profit, many will either break even or won’t have the option of selling unless they come out of pocket to cover the difference.
Real estate in Orlando like other commodities, is mostly subject to supply and demand. If the employment rate is up in a community and the local economy is strong, then there will be more demand for homeownership. On the other hand, if the community is experiencing a higher than the normal unemployment rate, then this will create less demand for homes.
Historically most of the time what happens is that although home values may go down, they eventually go on to stabilize or even go higher than before. The only exception to this is when a community is mostly employed by a single employer which goes ends up going out of business or an industry that’s experiencing a sharp downturn like what happened in the city of Detroit and the American car industry.
Do You Really Have To Sell?
You only take a loss if you sell. Unfortunately, my wife and I bought our home in Hunters Creek at the height of the Orlando real estate boom in 2005. Then just two years later, just like that, our home’s value was cut in half. But we still owed the full amount of the loan. Fortunately for us, this was our dream home. Hunters Creek is where we planned to raise our children and live our lives for at least the next ten years.
Since then, property values have gone back up but my point is that the home values didn’t affect us because we weren’t planning on moving anyway.
Try An Orlando Short Sale
Luckily real estate investing in Orlando is not as volatile as other investments can be. If you’re familiar with investing in stocks then you know that stocks can lose or gain 100% of its value within a few days. Homes, however, can go up or down in value also but it takes months and even years sometimes.
If homeowners with negative equity can’t afford to bring money to the table in order to sell, they’re left with only a few options. They can either keep the house, continue to make payments and hope that one day the home’s value goes back up or they can do a short sale on the home in order to get it sold.
A short sale is when the lender accepts a discount on the payoff so that the home can be sold at fair market value. In most cases the homeowner will have to prove financial hardship and be in default on the mortgage at least 30 days.
If negotiated correctly by your short sale realtor, the transaction will be recorded as a full payoff and the bank promises never to come after you for the balance of the loan. There are also “cash for keys” programs available to homeowners in which the short sale lender gives thousands of dollars back to the homeowners for relocation assistance. We’ve gotten our Orlando short sale clients anywhere from $3,000 to $30,000 back at the closing.
