'Short sales presented as alternative to foreclosure

For many people, the American Dream of home ownership has given way to the American Nightmare.

Homeowners are finding themselves trapped in a retreating housing market. With declining values and a bloated inventory, the market offers little prospect for cash-strapped owners looking to sell a home they can no longer afford. Whether buyers paid too much for a home, accepted a variable interest rate that has put their mortgage payments out of reach, took on too much debt or lost their jobs, millions of homeowners are facing foreclosure.

Even some of the savviest investors got caught up in the buying and selling frenzy leaving the last buyer to face some difficult decisions.

"Nationwide we have seen an astonishing 55 percent increase in foreclosures," Southern Escrow and Title president George T. Brannon Sr. said. "In Florida, there's been a staggering 84 percent increase for the first half of 2007 over the same period last year."

With their livelihood in increasing jeopardy, Realtors are learning to deal with the consequences of the situation. A series of seminars sponsored by the Bay County Association of Realtors and Southern Escrow focus on non-traditional methods to help property owners move an unwanted supply of real estate listings.

Brannon said the seminars provided an educational opportunity for real estate professionals looking for information on the latest selling techniques.

"Most of the Realtors have never been involved with foreclosures before," said Brannon, who has been in business for 30 years.

"The biggest hurdle for those involved is understanding how to negotiate short sales and the process of foreclosures," he said.

"We are walking them through the process," Brannon said.

"These alternative methods of selling property are seller driven and only time will tell if the mortgage holders are willing to work with borrowers in a meaningful way to get these properties sold," Brannon said.

Short sales, where the lender accepts less than what is owed on the mortgage, are an alternative to avoiding foreclosure, Southern Escrow's general counsel Scott Critzer said.

Short sales have become a hot topic because of the depressed real estate market that has resulted in declining values. Many property owners find themselves unable to meet their mortgage payments and look to short sales.

"Realtors are best equipped to help consumers handle the changes in the local real estate market that we are facing today," Bay County Association of Realtors president and Prudential Shimmering Sands Realty agent Jan Cox said. "Joint efforts like the seminars with Southern Escrow are a great way to educate the Realtor community on alternatives and to help promote the continued dream of homeownership."

What is a short sale?

A short sale means the seller's lender will consider a discounted payoff to release an existing mortgage. Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.

Buyers might want to think twice about making an offer on a pre-foreclosure, short sale home. It's not simple, and few can close in 30 days or less.

Be aware that the seller will need to be in default, to have stopped making mortgage payments, before a lender will consider a short sale. Also, the seller might have over-encumbered, owe more than the home is worth, so a discounted price might bring the price in line with market value, not below it.

From about.com