KINGMAN - With foreclosures still a huge problem in the regional housing market, one local Realtor is hoping to educate families who are in over their heads that there may be a better option than simply walking away and letting the bank take back your home.
Angela Kidd is a foreclosure and short sale specialist at RE/MAX Prestige Properties, located at 2331 Hualapai Mountain Road. An alumnus of Harris Real Estate University, the largest online real estate training school in the world, Kidd said she is trying to get the word out about a new book published by the university's founders.
Titled "Should I Short Sale My Home?" the book is a 97-page guide that talks homeowners through the short sale, a kind of sale that allows sellers to get out from under a distressed property without the serious credit hits that typically follow foreclosure.
"The idea for the book originated from the school as basically a collaboration between the graduate students and the instructors," Kidd said. "Basically the book teaches people what a short sale is, first of all, and what they have to do to qualify."
Put simply, a short sale is a kind of debt settlement, when a lender accepts a discount on a mortgage sale to avoid the foreclosure that would have occurred otherwise if the distressed homeowner failed to sell the property for what they owed on it. As an example, the book poses a situation where a homeowner owes $500,000 on their home, but the market value of the home is only $350,000. A short sale would occur when the lending institution, usually a bank, accepts the loss and agrees to sell the home for the market value, rather that the owed amount.
"It's like any other sale, it's just there's a contingency on the seller side," Kidd said. "The bank has to agree to take the amount offered on he house, which is usually market price or close to it."
In a standard market, such a sale is hardly a desirable outcome for the seller. But in today's uncharted waters, Kidd said it will often be the best option many underwater sellers can expect, and far better than foreclosing, which can drop a person's credit score by as much as 200 points and can linger on their credit history for as many as seven years, making it that much harder to secure a new home loan once the market does recover.
"It's better than a foreclosure," she said. "It doesn't stay on your credit as long, and it doesn't affect it as badly."
She did note that while short sales are often the best option for some homeowners, they are by no means the only one. While some banks are still slow to accept measures like loan modification, Kidd said homeowners should attempt to pursue such options first before resorting to short sale when they can.
"Sometimes a modification can be better for them," she said. "They should always talk to their bank first; a lot of times the bank will tell them what to do. You should never avoid your bank."
That said, Kidd admitted that she has seen a number of cases where homeowners who went through foreclosure could have done a short sale instead - if only they knew about them. Exposure, she said, was an important factor in educating homeowners as to what options are available, especially now, since banks are beginning to catch on to the positive impact short sales can have on their bottom line.
"I haven't advertised my (short sale) designation until recently, but I've run into tons of people in a bad situation who had no idea what a short sale is," Kidd said. "Some of the banks don't have their short sale departments together yet, but they're supposed to be doing that - banks benefit from short sales because foreclosures cost them money in legal fees and holding costs, as much as $50,000 a pop."
Kidd is currently offering the book as a free .pdf file available through her office. For more information, call (928) 279-4957 or e-mail Kidd at firstname.lastname@example.org.