Bonnie Milstead, CDPE, CRS, GRI, LTG

A short sale can be an excellent alternative for homeowners who owe more on their homes than they are currently worth and NEED to sell.

Due to overwhelming market changs lenders have become much more negtiable when it comes to short sales. Recent changes in policy within many organizations have made the chances of getting a short sale approved much higher.


So what is a short sale anyway, and how could it possibly help the lender, a homeowner and a buyer at the same time?

THE BANK DOES NOT WANT YOUR HOUSE!

A short sale occurs when:

A negotiation is entered into with the homeowner's mortgge company or companies to accept less than the full balance of the loan at closing. A buyer closes on the property and the property is "sold short."

Sounds easy enough, doesn't it? However, it is an involved process that takes time, patience good communication skills, organization on your part AND the cooperation of the seller.

What A Short Sale Is NOT:

Homeowners need to be clear that a short sale is a way to avoid foreclosure. It is not a "get out of my mortgage free card." A seller has to have a valid financial hardship for why they cannot pay their mortgage. A seller without a financial hardship that is upside down on their mortgage and wants to sell is NOT A POTENTIAL SHORT SALE. Some situations that may qualify a seller for a short sale are; loss of job, divorce, payment increase or mortgage interest rate adjustment, death of a spouse, severe illness, incarceration, etc.

Three Choices for Homeowners

Generally speaking, a homeowner facing foreclosure can take one of three paths. They can either...Get caught up on the mortgage payments and keep the home

1. Get caught up on their mortgage payments.
2. Find a way to sell the home before they go into foreclosure
3. Allow the bank to foreclose on the home

Obviously, getting the mortgage caught up is the most desirable. If possible, the homeowner should try to get caught up in order to keep the home. Real estate is still one of the best investments you can have, so you shouldn't let it slip away without making every effort to keep the property.

The third option is obviously the least desirable. Nobody wants a foreclosure to go on their credit history, because it will make future home purchases / mortgage approvals more difficult.

The Real Estate Short Sale Option

The second option - the short sale , is a way for the homeowner to sell the home quickly in order to avoid a complete foreclosure. With this approach, the lender gets some of their money back, the homeowner avoids foreclosure, and somebody gets a good deal on a home.

How does a buyer in a short sale typically get a good deal? Because of the very nature of the short sale. Through this process, the lender agrees to let the homeowner sell the home for less than the amount the homeowner still owes to the lender. Sometimes in order to move the property quickly it is priced VERY competetively. While most lenders want some idea of the market value of the property via a Broker Price Opinion they realize that in today's market the property MUST be very competivily priced in order for it to sell. This often means that the home will be sold for less than market value.

Why would the lender do such a thing? Because they want to sell the home as quickly as possible and avoid losing any more money from the nonperforming loan. The lender also wants to avoid foreclosing on the home, because that means they will have to manage and sell the property (or pay somebody to do that for them). So the real estate short sale is a way to get the loan off their books quickly, without having to go through the extensive process of foreclosure, real estate auction, etc.

SELLER BEWARE! There are people out there who take advantage of homeowners in financial distress.

The short sale process can help certain types of homebuyers in certain situations -- such as those who are facing foreclosure with no hope of getting caught up on their mortgage payments. But this type of process also attracts some sharks, so you need to be a smart consumer ... and that means doing plenty of research.

Work with a real estate professional experienced in short sales. An excellent designation is the "Certified Distressed Property Expert" credential. We have extensive training in foreclosure avoidance and short sales.

It's a new day, a New Year and a new administration in Washington! It's time for renewed hope in our Country. And hopefully, with a new administration in Washington the media will start talking about positive news for a change! We need some GOOD NEWS!

That said, there is GOOD NEWS for savvy real estate buyers and many ARE taking advantage of the current buyers market. There were over 2,400 hundred properties sold in the Panama City and Panama City Beach, Bay County areas in 2008. Not bad for our quiet, little town! Okay, that it is a buyers market has been said and said again BUT as real estate professionals I don't think we can emphasize enough the current opportunites. The media needs to stand corrected! You don't have to have a crystal ball to predict the future of the real estate market. After a turndown, an UPWARD TREND FOLLOWS. Make no mistake - that upward trend IS coming. When? Who knows for sure. The Spring-Summer home-buying season, will soon be here and that usually means sales pick up which can cause prices to firm up or solidify. Currently with a large inventory of properties on the market, desperate sellers, seller paid closing costs, desperate sellers, super low interest rates, desperate sellers, drastically reduced listing prices on inventory, desperate sellers, and new tax incentives it's a win-win for buyers. Oh, and did I mention desperate sellers?!?!

Next, don't let anyone tell you there are no mortgages to be had. That is simly not true. Yes, the qualifying critera has changed, as it should have but there are good loan packages available at excellent interest rates to qualified buyers. And in some cases where Rural Development Housing guidelines apply there is 100% financing available with no down payment to qualified buyers.

I am optimistic and excited about our future here in Bay County, the brand New Year, and the opportunity for our nation to move forward on a positive note. With the World's Most Beautiful Beaches, incredible weather, our new Pier Park with upscale shopping and numerous restaurants, the new Seabreeze Jazz Festival venue each Spring bringing world renowned musicians, a new International Airport coming in 2010, a friendly, small town environment AND incredible opportunies for savvy real estate buyers we have much to offer here in Panama City and Panama City Beach.

Here's to the future and savvy real estate purchases!