Realtor Rick Richardson recently earned the Certified Distressed Property Expert designation from the Distressed Property Institute. Richardson has 15 years of experience in the real estate industry, including the past 11 years with Re/Max in Springfield.
Q: How big is the distressed property problem in this area?
A: As of (July 27) on the Greater Springfield Board of Realtors Multilist system, of all the single-family listings which ... number 3,440, 3.6 percent of those have in the listing the phrase "short sale." That's in three counties - Greene, Webster and Christian. That doesn't always mean that they've already talked to the bank, but in most cases they have. The banks usually say, "Bring us an offer and we'll start the process." In Springfield alone, it's about 3.2 percent of listings.
Q: What is a short sale?
A: A short sale is a foreclosure avoidance sale, where the lender is prepared to take less than what is owed on the property just to get it off the bank's books and let the property owner get out without the bruise on their credit report. In some cases, the bank may require a seller to sign a note for whatever the difference is between what was owed and what it sold for. But not in all cases; some banks are prepared to take whatever they can get for the property.
Q: Will the problem continue to grow?
A: We have to believe so, just because a lot of these subprime loans have not reset yet. They haven't gone through the process of the interest rate rising to the point where the homeowner can no longer afford it. People who were really not qualified to buy houses were buying on a teaser-type rate, and at some point that will get away from them. You're talking about a payment that could double three to five years after they buy the home, and at that point, the equity position is almost nil because of the way the loan is structured.
Q: Are banks more willing to consider short sales now than in the past?
A: It's almost a situation where they have to be. If you've ever been to a foreclosure sale, you know they have to put the house on the market at a price lower than the homes it's compared to. A short sale avoids that and the legal cost to both the homeowner and the bank. It's a cleaner process, although it takes longer.
Q: How did you earn this designation?
A: There are several (designations) out there. I went with the one endorsed by Dave Liniger, the co-founder of Re/Max International. The choices were to go to a two-day seminar or to take a 16-hour training course on DVD followed by an exam, which I did. The banks require a tremendous amount of paperwork to do a short sale, so the course gives you the familiarity with the program.
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