CEO offers alternatives to foreclosureWritten by Kristen Criswell | | firstname.lastname@example.org
Short sales provide homeowners who are at risk of losing their home an alternative to bankruptcy and foreclosure.
“For many homeowners, the short sale represents a unique opportunity to get out from under a mortgage that they can no longer afford without suffering through the foreclosure process,” said John Mangas, broker and co-owner of RE/MAX Preferred Associates in Toledo.
Short sales are not only beneficial to the homeowner and the lender, but also to the community because it maintains property values by keeping down the number of vacant houses in the area, said Margaret Kelly, CEO of RE/MAX LLC.
“There are a lot of families right now that can’t keep their home, but if they can short sale their house for less than what the mortgage is, the bank forgives the difference and they are able to move on and move out,” she said. “[Homeowners] don’t have to file bankruptcy, the house doesn’t have to go into foreclosure, you don’t have a foreclosed empty house in the neighborhood and you get someone else moved into it right away.”
The first step individuals who are having trouble making mortgage payments should take is talking with their lender, Kelly said.
Lenders may be able to modify loans or adjust terms, keeping individuals and families in their homes. If someone is still struggling, the next step would be to talk with a real estate professional about short sales, Kelly said.
“It’s true, don’t do it alone. Get an expert who knows how to handle distressed properties and understands what [seller] options are,” Kelly said. “You can’t do a short sale as a ‘for sale by owner’.”
Short sales require additional paperwork and a good working relationship between real estate agents and banks. It’s important for the real estate professional to have proper certification and understanding of short sales because improperly filled out paperwork can lead to a longer short sale process, Kelly said.
When looking for an agent, individuals should find a professional with a Certified Distressed Property Expert (CDPE) designation or a Short Sale & Foreclosure Resource (SFR) designation.
In order to qualify for a short sale, individuals must demonstrate financial hardship, a monthly income shortfall or insolvency, according to the CDPE website.
“Real estate agents have a key role in the industry to help people. We can’t solve their problem about keeping a home, but what they can do is help them at least keep part of their credit and make a smooth transition into somewhere else to live,” Kelly said.