When you optimistically took out your loan to buy your home, it is likely you were thinking the market would continue on the skyrocket incline that was true well into 2005 in San Jose and the South Bay, as well as much of the state of California. Downtown San Jose condominiums provided a great investment opportunity, as did nearly every single family residence. Then you may find yourself in a bind. Many variable-rate interest loans bumped up in 2007 and will continue to bump up in 2008. In fact, loan payments may double as homeowners come to terms with interest rate increases.

Then the market in downtown San Jose, Santa Clara County and surrounding communities begn to experience sluggish action and less of a seller’s market environment. In some cases, sellers fall behind on mortgage payments. Home sellers do not have to foreclose. You can make specific, tailored arrangements with your lender to sell the home for the present market value. The bank will take a loss but you will be released from the weight of the loans. And you do not have to experience a foreclosure or a bankruptcy.

A short sale is when the amount of the loan is higher than the market value of the home. The true market value is defined as the amount someone is willing to pay for your home right now. It’s not what you would like to receive, or what your neighbors received for their home a few months ago. The true market value is not actually known until your home is on the market and valid offers arrive!

Your realtor may prove of great help to you during this process of selling for less than you owe on your home. Your realtor will step up and apply for the short sale paperwork with your lender. Then, when you receive an offer, your realtor will run it by the bank for approval. The major difference in a short sale scenario is that the seller doesn’t control exactly the terms of the home sale. The offer must go to the bank for a green light to sell your home. The advantages are many! You are released from your home loan debt. You are released from further marks on your credit. You do not have to declare bankruptcy or go through a foreclosure. The hard part to take is that you are not leaving your home with cash to buy your next place. So it is a bittersweet victory. Look to your realtor for assistance through the process.