Short sales make home buying a reality

Some find dreams suddenly in reach thanks to lenders’ bargains


Three years ago, home ownership for Stephen and Cassie Treap seemed as likely as winning the Florida Lotto, because home prices were far above what the family of four could afford. It was only three years ago this month that the median price of a single-family home in Brevard County reached its apex at $248,700. The median price — the point at which half the homes sell for more, half for less — now stands at $166,400.

While not good for some sellers, the Treaps this June bought a 1,746-square-foot, three-bedroom home in Palm Bay for $121,900 in a foreclosure transaction. Nearly three years earlier, the same property sold for $215,400.
“Oh my, we thought we would not be able to buy a house for a long time,” said Cassie Treap, a stay-at-home mother and part-time student. She and her husband combed the listings and noticed houses selling in the $100,000 range that were priced at $300,000 two years ago.

“We would drive around asking each other who in this county makes enough money to be able to afford a mortgage on a $300,000 house,” she said. “Little did we know.”

Welcome to the ever-changing world of real estate in 2008, where homebuyers like the Treaps finally get a shot at ownership and sellers are forced to shave thousands of dollars off the price of a home to see movement. Adding a new wrinkle to the situation are more and more homes on the market involved in foreclosure or what’s known as a short sale.

Short sales, a growing trend in markets across the United States, involve a lender agreeing to let a borrower sell a house for less than what’s owed under the original loan terms.

For example, if a homeowner owes $100,000 on a mortgage, but is unable to make the monthly payment, he or she can sell the house. If the seller receives an offer for $80,000, the lender might let the sale to go through and write off the remaining $20,000 of the mortgage debt.

This saves the lender the legal cost of going through a foreclosure and being saddled with a property to sell.

Initially reluctant, lenders are becoming more accepting of short sales, according to Realtors in Brevard County.

Of course, not all lenders will accept short sales or discounted payoffs, especially if it makes more financial sense to foreclose. Not all sellers, nor all properties, qualify. Lenders don’t relish the loss, but it gets them out of the property-owning business.

“I can tell you that Wachovia does offer short sales to customers,” said Jamie Grady, a spokeswoman for Charlotte, N.C.-based Wachovia Corp. who was unable to provide details on the bank’s short-sale policy.
“We evaluate each situation on an individual basis,” Grady said.
Recent youjizz statistics compiled by the current president of the Melbourne Area Association of Realtors show that about 28 percent of the single-family homes for sale in Brevard County are foreclosed properties or involve short-sale agreements between the lender and the seller.

That’s a sizeable number, real estate representatives say, but hardly atypical in communities where in the heyday of an overheated market a person could buy a house one day, sell it a few hours later and make a quick $70,000 profit.
Now, buyers are in control with many types of homes, at more than fair prices, to choose from.

But the changing market comes at a cost.
Hundreds of homeowners have been foreclosed on or notified of pending foreclosure proceedings. Traditional sellers are competing against those transactions.

Foreclosure and short sales are a big part of the market, Dale Young, president of the Melbourne Area Association of Realtors, said.
“I would say a good 70 percent of the activity right now is people who are looking for bargains and at short sales. Whether it’s for their own residence or an investment, those seem to be the people that are out there,” Young added. “There’s still a pretty good market in the upper end of housing, the $500,000 and above.”

John Krause, a Realtor with National Realty of Brevard Inc., who helped the Treaps buy their home, said “there are a lot quality homes” here that are priced competitively.
Nationwide, estimates vary on how many homes are on the market due to foreclosures or short sales. Some say it’s 15 to 25 percent. Walter Molony, spokesman with the National Association of Realtors, said one-third of current U.S. housing transactions involve foreclosure or short sales.

Across the nation, 739,714 homes — or one in every 171 households — received at least one foreclosure-related notice during the quarter, said RealtyTrac, a California-based company that tracks foreclosures. That’s up 121 percent from the second quarter of 2007.

RealtyTrac monitors default notices, auction sales and bank repossessions. Banks took back more than 222,000 properties nationwide in the second quarter, the company said. Bank repossessions accounted for 30 percent of foreclosure activity, up from 24 percent in the previous quarter.
Locally, Palm Bay leads Brevard, where 46 percent of 1,515 homes on the local Multiple Listing Service are foreclosed or short-sale properties, according to figures compiled by Young at FLORIDA TODAY’s request. For people attempting to sell homes in the traditional manner, the changing dynamics are forcing them to make tough financial decisions.

Thomas Stewart had been trying to sell his Palm Bay home on Appleby Street for nearly 13 months.
Before he moved to South Florida, Stewart invested thousands of dollars in upgrades, including hurricane shutters and a permanent generator. He had the 1,270-square-foot, two-bedroom home on the market for $139,900. Unfortunately for him, he was forced to drop the asking price.
He sold it last month to Jody Ballard for $99,900. Stewart declined to comment on the sale. Ballard was thrilled to buy his first home.

“I knew there was no way I could have afforded a home at the prices like they were three years ago,” said Ballard, who works for the Palm Bay Parks and Recreation Department. “This one kind of fit just right. He put a lot of money into the house and I took advantage of that.”

Cassie Treap has similar emotions.
“I think $215,000 is much too high of a price for this house, but others might disagree with me,” she said of the previous sales price. “But I do think we got a great deal on our home.”

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