The Noblesville Real Estate market is no different than most others. No area, no price point is immune to the Short Sale & Foreclosure market. In fact, simply look around and you probably have one or more in your very own neighborhood. As prideful homeowners, one thing we can do is be aware that there are options for a financially burdened homeowner and encourage them to speak with a Realtor that has been educated and trained on how to work through the transactions of distressed properties.
According to Inman News, short sales or REO/bankowned properties account for up to 50% of all closed sales.
Let’s start with short sales. They are NOT foreclosures but could turn into one. A “short sale” occurs when the homeowner’s mortgage company or companies agree/negotiate to accept LESS than the full balance of the loan. While it is a way to avoid foreclosure, a short sale is not a “get out of my mortgage FREE card”.
For the lender to agree to negotiate a short sale, there must be an acceptable hardship. It must be legitimate and it must be verifiable. A “hardship” is defined as a material change in the financial situation of a homeowner that is or will affect their ability to pay their mortgage. Examples of acceptable financial hardships are:
- Loss of job
- Business failure
- Damage to property
- Death of a spouse or family member
- Severe illness, medical bills
- Divorce, separation
- Mandatory job relocation
- Military service
- Payment increase or mortgage adjustment
- Insurance or tax increase
- Reduced income and/or too much debt
If the property is not successfully negotiated as a short sale, then the property goes to Sheriff’s Sale/Auction. If not sold there, the property reverts back to the Lender. At that point in time, the property will be recorded as “foreclosed“. In the realtor world (i.e., Listing Sheets), the “foreclosed” properties are categorized as REO/bankowned.
The perfect Short Sale Buyer is one that has a lot of patience and typically doesn’t have anything to sell. They can take an indefinite amount of time to negotiate and close therefore causing the Buyer to incur month-to-month rent increases while they’re waiting to close on their short sale transaction. While short sales and foreclosed properties are not new, the biggest stumbling blocks are overburdened lenders/banks who have hundreds and thousands of files to respond too as well as Realtors that don’t know how to work the process.
Without a proper systematic process to follow, short sale packages can easily be set aside because they are incomplete. A “perfectly” submitted package will get the attention of the loss mitigator at the lending institution and a successful short sale can be negotiated and closed in a timely manner. Realtors with the Certified Distressed Property Expert (CDPE) designation will close 8 out of 10 short sale transactions as compared to the market average of 1 out of 10 from those that are not properly trained or experienced working in this niche.
It is an involved process that requires an informed and educated Realtor – they take time, patience, good communication skills, perseverance, tenacity, excellent organization and follow through skills, and professionalism. This Noblesville Realtor has earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed extensive training in foreclosure avoidance and short sales. This is invaluable expertise to offer at a time when there are so many “distressed” properties.
Alex Charfen, founder of the Distressed Property Institute in Boca Raton, Fla., said that Realtors ® with the CDPE designation have valuable training in short sales that can offer the homeowner much better alternatives to foreclosure, which virtually destroys the credit rating. These experts also may better understand market conditions and can help sellers through the emotional experience, he said. The Distressed Property Institute opened in January 2008 and provides training on-site and online. The CDPE is the premier designation for Realtors helping homeowners in distress and handling short sales.
If you have questions on short sales and how to avoid foreclosure, please contact this Noblesville Realtor. I’m here to help!