SOURCE: Press-Register
“Realtor Donna Fitts sold her client’s three-bedroom, gulf-front condominium unit at Enclave for $325,000, almost half of the original price.
The seller used the short sale to get out from under the debt and stop the bleeding, said Fitts of REMAX of Orange Beach.
Short sales and foreclosure sales are as hot as the pre-Hurricane Katrina condo market, Realtors and agents say, and the distressed inventory train could roll into mid-2011 before it comes to a stop.
Realtors David and Angie Swiger listed a three-bedroom, two-bath condo unit in the beachfront Ocean Reef in Gulf Shores for $114,000 this past week, getting three offers on the bank-owned unit within two days.
People look at distressed properties the same way they view a sale at the outlet mall, according to the Swigers of Swiger & Company Realtors in Gulf Shores. They want a good deal and a good value.
Alabama ranked 32nd out of the 51 states in foreclosure filings in February, according to RealtyTrac, an Irvine, Calif.-based foreclosure listings firm. There were 1,546 foreclosure filings in February, and 745 bank-owned properties.
The number of U.S. households facing foreclosure in February grew 6 percent from the year-ago level, but that was the smallest annual increase in four years.
Locally, foreclosure volume has been pretty consistent, according to Jonathan Keith of Keller Williams Realty in Mobile, who specializes in foreclosures. He estimates it will be 12 to 18 months before the foreclosure inventory is reduced.
Mobile averages 200 foreclosure filings a week, although the majority are postponed or canceled, he said. About 30 to 35 foreclosed properties are sold every week, many on the courthouse steps.
Baldwin County averages 125 to 150 foreclosure filings a week, and 20 to 30 a week actually go up for sale, he said.
Most buyers prefer foreclosure properties over short sales, which can take months to be approved, agents said.
A short sale is a property sale in which the proceeds fall short of the balance owed on the property loan. For example, Fitts’ seller owned more than $400,000 on her Enclave condo, which sold for $325,000. In that case, the lender recorded the seller’s loan deficiency as forgiven, she said.
There are no guarantees a lender will forgive the loan, and sometimes sellers must sign a promissory note to pay off the difference, Fitts said.
Agents say a struggling owner prefers a short sale, since the debt is resolved and the individual can apply for another mortgage in one to three years, depending on his credit status. A foreclosure typically involves hefty fees for the bank and a poorer credit report for the borrower.
“It takes everybody’s cooperation to make a short sale work,” said Fitts, who has handled 15 such transactions in the past year. “It can be frustrating and it takes a lot of patience. But in the end, when you tell the seller it’s approved, it’s awesome.”
Most of Wendy Menck’s closings have been foreclosures in the past year, she said. She and John and Linda Cramer, all of Prudential Nichols Real Estate in Daphne, started a monthly Househunt Safari of foreclosure property on the Eastern Shore, she said, and there’s always a waiting list for the 25-seat bus. The riders view 10 houses in foreclosure ranging from under $100,000 to as high as $700,000, she said. The agents provide lunch after the tour.
“The buyers give us a price bracket and quite often they can get a larger house than they anticipated or in a more desirable area,” she said.
First-time buyers are also looking for foreclosures, hoping to find a house below market value and get the $8,000 tax credit available for first-time home buyers, said Pam Middleton Stein of Dauphin Realty in Mobile.
Not all the deals on the market are foreclosures, Stein said.
“There are some desperate situations people want to get out from under,” she said. “Anybody who bought in 2006 and needs to sell now will have to sell for less. It’s a hard pill to swallow. But if you sell now and take a loss, you will get the loss back when you buy another house.”
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