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Hernando Today

Short Sales On Rise In Hernando County

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By TONY HOLT

Hernando Today

Published: May 23, 2008

BROOKSVILLE - If you see a house you like and you are patient enough to wait for it, go after it, one local Realtor said.

The foreclosure crisis in Hernando County has continued for months. There are more opportunities for prospective buyers to find deals on homes before the banks take over.

When a bank or mortgage lender discounts a loan balance because the mortgagor can't pay, that homeowner can sell the property for less than the outstanding balance of the loan.

The process is called a short sale.

Some Realtors like it. Others don't.

"If you see a home you want, buy it," said Gary Schraut of Coldwell Banker Schraut and Associates in Brooksville. "It's a great opportunity for the buyer. They're getting the home they want. It's just that the process takes a little longer."

Schraut said a short sale benefits the homeowner, who avoids the embarrassment and credit nightmare associated with a foreclosure. He also thinks it benefits the neighborhood. A successful and speedy short sale can keep the house from further depreciating in value.

"You won't believe what can happen in these foreclosures," he said.

When a homeowner knows he or she cannot make the payments, the house tends to be neglected during the final weeks or months, Schraut said. A mortgagor can skip out on those weeks and months if there is a short sale.

But Alexis McGee, president of foreclosures.com, said she encourages people to avoid short sales.

"Don't do them," she warned. "I don't like them. There is no advantage to the buyer. It only helps the seller.

"I tell people to wait until the bank owns it," McGee added. "I'd rather deal with only one decision-maker."

Sometimes, someone will agree to buy a house on a short sale and find out weeks or months later the deal was not approved. That happens when the mortgage lenders do not agree to take a significant loss on the house.

If it is a 10 or 15 percent loss, the bank is more inclined to approve it. Rarely is a short sale approved when the loss is 20 percent or higher, McGee said.

"They would rather foreclose at that point," she continued. "The bank would rather spend the money to fix the house up and try to mitigate those losses."

If someone opts for a short sale purchase, he or she needs to make sure the mortgage lender would approve it in advance. Sometimes, Realtors will not go to the lender first, McGee warned.

"If the seller hasn't asked the bank, I wouldn't even bother with it," she said.

The number of short sale purchases in Spring Hill has increased substantially in the last six months, said EXIT Realtor Al Boland.

While there are good deals to be had, buyers should beware of lengthy process.

"I tend to call it lender's purgatory," Boland said. "I don't encourage it unless you have a lot of a time to do it. It can take months."

On the other hand, a deal on a foreclosed house only takes days.

"Banks don't want to own houses," he said. "If they can find a deal, they will get rid of them in a hurry."

Reporter Tony Holt can be reached at 352-544-5283 or wholt@hernandotoday.com.

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