By Linda Kody, Loss Mitigation Certification Instructor
We are working through a challenging cycle of real estate. The housing statistics are improving, but we aren’t quite finished with short sales and foreclosures yet. Foreclosure inventory is low, but default notices are increasing. Our clients and customers still need our help.
In 2006, 90% of REALTORS® and the public didn’t know what a short sale was. Bankers had limited experience and no procedures in place to deal with short sales, and I think we all agree they were a painful experience.
Today, there are guidelines and systems in place, and I am confident most people know what a short sale is. They may be misinformed about what it all means, unsure of the true options and ramifications of selling short, but they know it exists! Myth versus Reality is the subject of another article.
The most notable changes that have had a significant impact have been governmental. Initiatives were established, such as HOPE for Homeowners, which oversees the Home Affordable Modification Program (HAMP), Home Affordable Refinance Program (HARP), and Home Affordable Foreclosures Program (HAFA). The Federal Debt Relief Act was just extended for one more year and helps with taxes for homeowners involved in short sales and foreclosures.
Additionally, the Principal Reduction Act is being introduced in limited capacity. Pre-approved short sales are gaining popularity and acceptance. The EQUATOR platform was created and is used by many banks to handle both short sales and foreclosures. New initiatives and programs are being tested regularly and change is the single constant in this area of real estate.
The million dollar question: is it easier to get a short sale closed? It depends. Every situation is unique. I have some that have closed in 60 days, and some I am still trying to close after nine months, and a few in between.
From a real estate professional’s point of view, many things have not changed and our process is the same. We need to do our homework and be sure the Sellers are committed to the process. Two hours spent in the beginning could save months of working only to end up without a closing.
Referring our Sellers to experts and non- profits for advice is a powerful tool in successfully completing short sales. Our Buyers need direction as well. Setting realistic expectations and knowing where to get information are valuable resources we bring to the process.