I’m not contemplating a short sale! I probably should have mentioned that. LOL
Today some neighbors of ours are moving out, and when we were researching the possibility of selling our house, comps and the like, their home came up as a short sale. There was never even a For Sale sign out front.
They’re a semi-retired couple, and I had them pegged as, “the millionaires next door,” due to a lucrative family business they’ve owned. They bought their house before we bought ours 8 years ago, so there’s no way they could be underwater, unless they took out a massive 2nd mortgage on the house. The houses in our neighborhood are holding steady at the value they were 6-7 years ago.
It’s just weird and unsettling to suddenly see a moving van out front.
I should also say that I’m actually hoping there’s some sort of loophole or they did a short sale to one of their kids, or there was some type of strategy involved for their sake, because I hate to think of them being destitute at this point in their lives (70’s).
“Today some neighbors of ours are moving out, and when we were researching the possibility of selling our house, comps and the like, their home came up as a short sale. There was never even a For Sale sign out front.”
There are some people who take out a big loan on their homes and even though they could make the mortgage payments, they decide “it’s not worth it financially” — they do a short sale or even let the bank foreclose.
Same as you, I was researching house sales in my neighborhood and found that someone on my street originally bought the house for $x, then they refinanced and took out a lot of cash when prices were up, then kept the cash, and let the bank foreclose recently. Then they bought another house cheap and spent signifcant amount of money remodeling, so clearly they had no financial hardship.
The bank must have auctioned the foreclosed home, because there was no for sale sign on that house either.
Unethical, but legal.
They could have been teetering on foreclosure and came up with a short sale at the last minute. Sometimes the lenders will accept that. Foreclosure is very costly for the lender. Could be that it was only a few thousand short of value or something.
We love Arizona and the people. It's like the biggest secret in the country how much better the quality of life is here compared to places like South Florida. I'm glad people can find happiness on the beach 24/7. Still, after 20+ years in SoFlo, I don't know that I'd ever move back being that this move was for family and career.
Self employed almost always have to sign personally on financing for business loans. Bank defaults on business loans can happen even if the business is sound due to loan requirements that require various covenants like minimum profits etc.
This means their personal residence is eventually subject to lien and levy if in technical default on business loan. Selling their residence could generate cash that would lower the business debt and get the bank off their back. During this recession, I personally experienced my credit sources have cut back on credit as well as required more payments. We are growing and need more working capital rather than less so a profitable business can find itself at risk of default when its business is growing too fast.