TBO.com - TBO is Tampa Bay Online

Highlands Today

'Negative Equity' It Means You Owe More Than The House Is Worth

Jasmina Meyer/Highlands Today

MIDFLORIDA realtor Cindy Kinser stakes a "For Sale" sign into the front yard of a new listing on Wednesday in Sebring. Kinser and her partner Sue Clark currently are using old signs for their listings as they are awaiting new signs to reflect the recent merge between C.S. Edwards Realty Inc. and MIDFLORIDA Real Estate Sales L.L.C.

ADVERTISEMENT

By GARY PINNELL

Highlands Today

Published: February 5, 2009

LAKE PLACID - It's another sign of the times. Most real estate buyers and sellers know about short sales - where houses are worth less than their mortgages. But these days, there are real estate agents who specialize in short sales.

In Florida, where a real estate boom doubled, then tripled the prices of some homes, the bubble burst two years ago.

Now, 29 percent of Florida homes are worth less than their mortgages. That means three of every 10 homeowners are in over their heads.

"It's a totally new world from three years ago, said Sue Clark, a broker-associate with MidFlorida Real Estate Sales in Lake Placid.

"In Highlands County," said Clark, "we now have 238 short sell listings."

Realtors have listed 4,694 houses, condos, lots and commercial properties in the county, so 5 percent of all listings are short sales. Another 198 listed properties are in foreclosure.

There are so many short sales in Highlands County these days, Clark, her associate Cindy Kinser, and 18 other real estate agents attended a seminar at South Florida Community Colleges.

"We are certified in short sales," Kinser said.

Good News

The real estate earthquake had three epicenters, according to First American CoreLogic Negative Equity Report: Riverside, Calif.; Las Vegas, Nev.; and Fort Myers. Of the top 20 ZIP codes where most negative equity - more mortgage than equity - occurred, 18 were in those three states.

Now the good news: where there are desperate sellers, there are extraordinary bargains.

Twenty-six of the short sales in Highlands County are pending, said Clark, the 2007 Realtor of the Year.

"There is a contract on them. They are waiting to close," said Clark, who sprinkled in some bad news as well. "Banks take a long time to make up their minds. It's a very long process."

"Short sales require a patient buyer," said Kinser. Her fastest-ever short sale took 30 days; the longest wound up in 180 days.

An even better bargain: foreclosures. There are 198 among the Highlands County listings.

"Those are easier to sell," Clark said. "Buyers know they can close within 90 days."

Prices on a foreclosed home are also cheaper. Clark calls them, "more realistic," because there is no "pie in the sky" thinking from sellers.

A Way Out

For a homeowner in trouble, a short sale can be an exact solution.

"They get to stay in their home. They get time to plan when they have to leave," said Kinser, who moved here from the Akron-Canton area of Ohio two years ago. Because the economy collapsed there sooner, the Buckeye State was on the leading edge of the short-sale wave.

Banks are more patient with a short sale, Kinser said, because they realize a resolution is coming. "They know we're actively marketing it."

Short sales wreak less havoc on credit reports. As soon as homeowners realize they can't keep their house, they should consider a short sale, Clark said.

"Most lenders will report on the successful closing of a short sale that it's been settled," Kinser said. A borrower who misses two to five payments and is foreclosed upon loses 140 to 200 points on a credit report. A short sale results in 50 to 100 negative points.

If a foreclosure is inevitable, accepting a short sale is far preferable for the seller, Kinser said.

It's better for the buyer, too. The average foreclosure costs the lender $54,000 in lost payments, attorney fees and bank employees' time, and they still have to sell the property, Clark said.

Short sales are actually good news for a real estate agent, Clark said. "They're hot sellers."

What Is A Short Sale?

A short sale occurs when a homeowner owes the bank more than the property is worth.

An example: you bought a house three years ago for $250,000. Today you must sell, but the economy tanked, so the house is worth only $200,000.

The homeowner - the seller - contacts a real estate agent, who negotiates with the bank. The bank agrees to take the shorter amount.

Highlands Today senior reporter Gary Pinnell can be reached at gpinnell@highlandstoday.com or 863-386-5828

Share this:

Loading Comments...

Email Print

ADVERTISEMENT