It is no shock to anyone in the Phoenix  area that the real estate market is not as it once was. No longer are homes increasing at astronomical paces nor are they selling in days. In these times, most people are left in a situation where they can not sell their home for what they owe on the residence.

Here is a link to Arizona Short Sale Information.  

This leaves a home owner with a couple of choices:
1) wait out the market, 2) let the home foreclose, or 3) negotiate a short sale. If you can’t wait out the market, you may have to look only at the later two options and while neither is an ideal solution, both may not be as awful as they seem.

What is a Short Sale?

A short sale is a sale where the bank agrees to take less than the amount owed on the residence as part of an agreed sale, in lieu of having the residence foreclosed. The short sale has to involve a sale at a fair value based upon an arms length transaction. There is also no requirement that the bank agree to a short sale. This is realistically a voluntary agreement that the lender can decide to enter into with the owner or not.

Why would a Lender Agree to a Short Sale?

The most frequent reason a bank would accept a short sale is a financial decision based upon the amount owed and the value of the home. If the property has very little or no equity the chances the bank receiving any money at a foreclosure sale are low. Foreclosure sales often end in below market sales prices and are expensive to the lender. As such the bank can often get more by approving the short sale.

What about Anti-Deficiency Laws?

Another reason a lender may approve a short sale is whether the state has anti-deficiency laws. An anti-deficiency law is a law that restricts a lender from recovering any loss over the price received at a foreclosure sale from the borrower/home owner. In essence, anti-deficiency rules restrict a bank ability to recover from home owners.
Does AZ Have an Anti-Deficiency Law?
The state of Arizona has a relatively broad anti-deficiency that protects real estate. If your house is secured with a deed of trust and your house is sold at a trustee’s sale the bank may not come after you for any deficiency if:

* The property is 2.5 acres or less;
* Used for single family or two family husing; and
* Sold pursuant to the Trustee’s power of sale.

If the real estate is secured by a purchase money mortgage, that is a loan used to pay all or part of the acquisition price of the residence, the lender may not recovery any deficiency if:

* The real estate is 2.5 acres or less
* Used for single family or two family dwelling; and
* The home owner did not reduce the value of the home by waste.

What if the Property is Not My Primary Residence?

The Arizona Anti-Deficiency Law protects all real estate under 2.5 acres used as a single family or two family residence. There is no requirement that the property is your Homestead.
 What if it is a second Deed of Trust or Mortgage? The Arizona laws does not care about the first and second lien holders. If the requirements are met whether the lien is a first or second, or even third position, the law does not change.

There is a lot of info about short sales and homeowner.  For information on Arizona Short Sales, be sure to visit our website by clicking the link.