There's a dark side to Kathy Cox's real estate business.
Sure, a final house sale brings forth bright smiles and sighs of relief. But most sellers Cox deals with usually come to her distressed, depressed, occasionally suicidal.
The CBSHome Real Estate agent specializes in “short sales,” a less-talked-about alternative to foreclosure, and one where mortgage holders suffering a hardship seek the lender's approval to accept less for the property than what is owed.
Although the housing market is on the mend and fewer homes are being repossessed, a sizable share of Douglas and Sarpy County borrowers still owe more than the worth of their houses and are considered “seriously underwater,” according to a national company that tracks the housing market.
Cox said the short sale option is less bruising on a credit score than foreclosure. And while investors don't always agree to the short sale, they generally view them as a less costly route than foreclosure that should be explored.
“If more people knew, they wouldn't just walk away,” said Cox, who said she can't help but get personally affected after hearing client hardships.
About 3.7 percent of all residential sales in the Omaha-Council Bluffs metropolitan area last year were short sales that occurred after the homeowner received a notice of default, according to RealtyTrac, a national real estate information company. That's down from 4 percent the year before.
Declining also is the number of properties in foreclosure proceedings. In March, one in every 1,410 properties in the Omaha metro area was in some step of the foreclosure process — that is one-third fewer homes than a year earlier, RealtyTrac reported.
While those signs point to a rebounding Omaha market, RealtyTrac Vice President Daren Blomquist notes that the chunk of mortgage holders with high negative equity in homes remain potential candidates for short sales or foreclosure action.
Last month, about 10 percent of Douglas County mortgage holders and 9 percent in Sarpy County owed 125 percent or more than the value of their home and were considered “seriously underwater.”
The national average of seriously underwater homeowners was 26 percent. So, relatively speaking, Blomquist said, the Omaha area housing market is in good shape.
“The trend there is less distress,” he said.
Other positive signs include rising home values in the Omaha-Council Bluffs metro area. According to CoreLogic, another national firm that monitors housing activity, home prices were up by 5.1 percent in February compared with a year earlier.
CoreLogic also reports that Nebraska is among states with the lowest foreclosure activity, behind Wyoming, Alaska and North Dakota.
Though encouraged by rising home prices, Cox said plenty of homeowners remain in financial straits and in need of direction.
She receives lists of area homeowners who have received formal notice that they are behind on mortgage payments. In Douglas County alone, she said, the list has included about 40 new names each week for the past several weeks.
Cox said CBSHomes is developing a marketing strategy to better reach those homeowners to discuss a short sale. Many stop opening mail, suspecting it could be from a bill collector, she said, or are in denial.
“They ignore the situation like maybe it will go away.”
Cox, who has earned professional certification in short sales, said many people aren't aware of avenues to avert foreclosure.
She said she's been largely successful in working with investors and banks to approve short sales. Her short sale deals increased from just two in 2008 to 59 last year.
Wells Fargo Bank encourages discussion of the short sale possibility, said spokeswoman Angie Kaipust.
“For the homeowner, it can help you make a graceful exit and avoid foreclosure,” she said. “For investors, it generally produces less of a loss.”
Cox said the investor typically loses 10 percent to 15 percent less on a short sale than a foreclosure proceeding.
Jan Dibble of First National Bank's mortgage collection department said a typical short sale can be approved in a few months or less in Omaha and generally is preferred by the homeowner because there is less of a stigma.
Cox said sellers in a short sale might qualify for up to $3,000 in relocation expenses, and typically are able to buy a new house sooner than had they been forced into foreclosure.
That's not to say that the buyer walks away with a big discount. An appraisal determines fair market value, and it's up to the investor to accept a lower amount.
Suzan Downing of Keller Williams Omaha, who attended a recent Omaha Area Board of Realtors workshop presented by Cox, said the half-dozen short sales she's been involved in were all different, and a few were “borderline nightmares” in part because of the many personalities and officials involved.
“Not every agent is cut out for it,” she said.
Aside from an agent's commission, she said, the motivation to pursue such sales is gratitude from sellers.
At Cox's workplace, co-workers posted a Peanuts cartoon with Lucy sitting under the “doctor is in” sign, a reference to the hours she spends listening and counseling.
Cox, who also handles traditional sales, said her start in short sales came when a family member needed expertise. She's since represented people who are dying, divorcing, incapacitated from a car accident, laid off from a high-paying job. Others mismanaged funds or took out equity loans before the housing bubble burst. One senior citizen lost a business in the economic downturn.
Her clients' homes have sold for from $40,000 to $250,000, and their backgrounds vary.
“It can happen to anyone,” said Cox.
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