Short sales find spot in Myrtle Beach area's market

Short sales, one way for property owners to avoid foreclosure, are going to be part of the local market for quite some time, according to local Realtors, and that has some of them learning more about the process.

A short sale occurs when a homeowner sells a property for less than what is owed on the mortgage, and it has gained popularity as more homeowners found themselves owing more than their properties were worth as a result of the housing collapse. Property owners must get permission from the lender, which has to agree to take a loss, when the property is sold.

Short sales used to be a painfully slow process by all accounts, but now local Realtors say that more of the deals are being approved and the process is going more quickly.

Part of that success is because of better education for all people involved in the process, said Alex Holbert, broker-in-charge at ReMax Town & Country. He joined 73 others who took a two-day course to become Certified Distressed Property Experts and learn how to execute short sales with more success.

"The number of short sales are rising all across the country as a result of lenders making a concerted shift," said Tony Martinez, a certified master instructor with the Distressed Property Institute, which taught the course.

The current situation doesn't look to be changing or improving soon, so Realtors should explore opportunities to help people through options such as short sales, he said.

"The first thing is that [homeowners] should realize a short sale is not a get-me-out-of-my-mortgage-free card," Martinez said. "The essence is that someone is in a hardship position."

Short sales hurt a person's credit and could result in the property owner paying taxes on the amount the bank loses in the deal, he said.

Holbert said that classes like the one this week are important to get agents throughout the community on the same page.

"We feel the market is going to be here three to four, maybe five years," he said. "A lot of our business is short sale business but we just keep chipping away at it."

About 10 percent of all condos sold and 8 percent of all single-family homes sold between January and September were short sales, according to the Multiple Listing Service.

The short sale process seems to be speeding up from the snail's pace it moved at last year, said ReMax Town & Country Realtor Wendy Hodges. With some properties, especially those with mortgages from Bank of America, deals are being worked out in about two months, compared with the six months or longer it took to even get an initial response in the past.

Bank of America has introduced a computer-based system that allows Realtors to submit all the necessary paperwork - including a financial worksheet, pay stubs, bank statements and a hardship letter - online and communicate by e-mail over a few days to negotiate a price.

"The key to working with a short sale is just to make sure you have all the details," Hodges said.

Despite the increased speed of some decisions, short sales are still a labor-intensive process that requires a lot of paperwork and a seller who is willing to disclose financial information to the Realtor.

Hodges said she is increasingly seeing oceanfront and luxury properties sold through the short sale process.

Traci Miles, with Century 21 Boling & Associates, has been working with short sales and decided to build on her knowledge.

"The wave of real estate is moving to the short sales, pre-foreclosures," she said. " [I'm] really trying to help people who are distressed out before they hit foreclosures."

Miles said the most important part of the process is putting together the package with all the homeowners' information and presenting it to the lender in a streamlined way that will speed approval.

Greg Harrelson, the owner of Century 21 The Harrelson Group, who was also at the CDPE class earlier this week, said that the short sale segment of the local real estate market appears to be growing.

One trend he has noticed is that property owners seem to be more educated. He is fielding questions about how he might be able to help before any mortgage payments have been missed, not after foreclosure proceedings have started.

"We need to be ready for an increase in this area," he said. "I wanted to be educated enough to help these people."

Harrelson said banks are looking to move these properties off their books and may consider improving short sale processes as one way to do that.

In addition to helping property owners avoid foreclosure, short sales may also be better for the broader real estate market, he said.

"At the end of the day, hopefully the average short sale price will be above the average foreclosure price and hopefully that will stabilize the market a little bit," Harrelson said.