Even though the real estate market crashed many years ago, the effects are still being felt around the country today. Some areas are feeling the effects of a depressed market more than others, and Fairfield County happens to be one of those areas still in real estate distress. If you are a homeowner who is struggling financially, you may have questions about what you should do and a Certified Depressed Properties Expert, or CDPE, is someone who can help to answer those questions.
A Realtor chooses to get their CDPE designation through additional education and study. Not every Realtor has a CDPE designation so be sure that the one you choose has the knowledge, experience and designation to do right by you! Your home is probably the largest investment you have ever made in your life and making the choice to sell short sale or foreclose on it can be very scary and have financial ramifications for several years. A Realtor with a CDPE can help you through the process in a less stressful manner.
First, let’s define a “depressed property”. A depressed property is one that has one or more of the following characteristics:
1. The homeowner owes more than the home is worth and can’t afford the mortgage payments
2. The homeowner has a personal financial hardship (like a job loss) that will prevent them from making future payments
3. The property is in foreclosure or may have already been foreclosed upon and is being sold by the lender
4. The property is already in the short sale process.
All of these situations mean that whomever is selling the property is doing so under distress, because circumstances require them to sell the home regardless of current values or what the property might yield in a sale.
So what is the difference between a short sale and a foreclosure? A short sale, sometimes referred to as a “pre-foreclosure sale”, is when you sell your home for less than the remaining balance owed to your lender. The lender and borrower decide that selling the property and absorbing the moderate loss is preferable to defaulting on the loan. When making the calculation to determine if your home is worth less than you owe, make sure you deduct the cost of Realtor commissions, closing costs, and state excise taxes.
A foreclosure is a situation in which a homeowner is unable to make full principal and interest payments, allowing the lender to seize the property, evict the homeowner and sell the property under the terms of the loan.
A short sale is almost always a better option for both parties. You should know, however, that your credit score will suffer in both instances. But chances are that you will recover faster from selling short than if you foreclose. I will cover some frequently asked questions on this subject in my next blog.
In this tough market, short sales have been increasing in number. From this short explanation alone, you can deduce that it’s a very complicated real estate transaction that has very important implications for you. These kinds of transactions should only be handled by a real estate professional who has the knowledge and experience dealing with the process and a proven track record of successfully negotiating the contracts through to a sale.
Don’t sell yourself short again and expect that just any agent can handle this complex transaction. Use someone like me, Dagny Eason, with years of experience, a network of people who can help, and a CDPE designation to back it up!
For more information getting a mortgage, go to my Mortgage Guides on my website. Whether buying or selling, I'm always happy to assist you!
What is a short sale and who do I call to help me?