Short
sales not a long shot, experts sayBy
J. Craig Anderson The
Arizona Republic 09.22.09
Home
builders, real-estate investors and other home sellers say
they have seen a boost in interest as a Nov. 30 deadline
approaches for first-time buyers to receive a federal
income-tax rebate of up to $8,000.
But
one growing segment of the Phoenix-area housing market has not
benefited from the impending buyer tax-credit cutoff.
Short
sellers, financially distressed homeowners attempting to
burrow out from under an unmanageable loan by selling the home
to a third party, face greater challenges today because of a
perception that short sales are time-consuming and likely to
fail, local housing experts said.
However,
real-estate agents who specialize in short sales said they
currently offer the best deal for buyers and aren't always as
slow and shaky as people think.
"It
depends on the lender . . . and whether the listing agent
knows what they're doing," said Rick Wandrych, associate
real-estate broker and manager with HomeSmart's Signature
Group in
Scottsdale
.
One
of the housing market's biggest shifts in the past year, he
said, is that lenders have grown to accept short sales as a
way to avoid foreclosing on and taking possession of
borrowers' homes, which no lender wants to do.
He
said 75 percent of "distressed" home sales are now
short sales, up from practically zero percent a year ago.
When
a short sale goes smoothly, it can be completed in under a
month, Wandrych said, although he added that such cases are
rare.
"I
closed one short sale in 23 days," he said.
Real-estate
agent Maria Hass, with Realty Executives in
Chandler
, said the housing market is rife with short-sale horror
stories.
She
said many buyers are avoiding them for fear of getting mired
in a long negotiation process with an uncertain outcome.
The
escrow process on a normal sale usually takes about 30 days,
she said, and on a short sale, it can easily take twice that.
Still,
Hass agreed that working with a seller's agent who understands
how short sales work can speed the process.
It
is the seller's representative who generally must negotiate
with multiple parties, including the primary lender, usually a
second lender, private mortgage-insurance providers and
others, in addition to the buyer.
Hass
said that she would not necessarily discourage a client hoping
to get the first-time home-buyer tax credit from attempting to
buy via a short sale but that it would most likely have to be
a simpler sale involving one lender.
Wandrych
said about 90 percent of all short sales involve a second
lender, the issuer of a home-equity loan, that isn't likely to
benefit from the sale. All short-sale proceeds go to the
primary lender, unless the sale price exceeds the amount owed
on the primary mortgage loan.
Wandrych
currently represents Lucas and Ange Mitchell, a young Laveen
couple who have struggled to pay the mortgage because both
husband and wife have seen their pay reduced by 25 percent in
the economic downturn.
Although
going through with the short sale has been difficult
emotionally, Lucas said the couple realized it was a choice
between paying the mortgage and providing for the needs of
their young children.
Wandrych
said he has learned the hard way that some buyers attempt to
improve their chances of completing a short sale by feigning
interest in a number of short-sale homes while intending to
buy only the first one that goes through.
The
other short-sellers, who endure a long, stressful process on
that buyer's behalf, end up getting foreclosed on by their
lenders.
Now,
Wandrych said, he makes buyers sign a mutual-exclusivity
contract.
"Remember
that short-sellers gain very little - they're trying to do the
right thing," he said. "These are the people who
aren't just walking away from their mortgages."
Even
if a short sale initiated today failed to close before the
tax-rebate deadline, the buyer probably would be getting a
better value than with any other type of purchase with the
rebate, Wandrych said.
"They've
got to be careful that they're not grabbing for nickels while
standing on dollars," he said.
For more
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