Snapshot of a two-tiered market

Some perspective:

• 1 in every 5 homes sold on the Eastern Shore of Mobile, Alabama, since the first of the year was a distress sale.

• Nationally, nearly 1 in every 4 homes sold in June was a foreclosure or short sale, according to CoreLogic. In Alabama that same month, 1 in every 7 sales was a distressed property.

• In Baldwin County, 5.2% of mortgage-holders were more than 90 days delinquent on their payments in the 2nd quarter, according to TransUnion Trend Data.

• Nationally, nearly 1 in 10 mortgages in the country's largest 100 metro areas are more than 90 days delinquent, according to the Center for Housing Policy, the Local Initiatives Support Corporation and the Urban Institute.

Despite the announcement that the Great Recession ended in June 2009, the problems are not over.

So, my message is:

The late Great Recession and housing crisis has created a two-tiered market on the Eastern Shore. While the distressed market influences the "regular market," there are clear divisions between the two in terms of value and condition.

And for the 5% or maybe 10% of you -- or someone you know -- who are behind on mortgage payments, there are ways to get out of the house without letting it go into foreclosure and wrecking your credit.

The two-tiered market:

The chart below shows that foreclosures sell at a price that's about 33% less than "regular" sales. Not all, but many of these properties may be seriously damaged and/or poorly constructed.

Instead of cookies on the countertops, the family may have etched in the Formica a parting shot at the no-good husband who left them in ruin.

Instead of bubbling outdoor fountains, there may be the constant runoff of a spring that the house was constructed upon.

Yes, sometimes, these homes are a good deal. But regular maintenance is usually long in the past. Eat or pay for the termite bond? You get the picture.

Certainly, the foreclosure market influences the "regular" market in pricing, and subsequently in how long it takes to sell. But these markets seem to be somewhat distinct right now.

These markets are not confined to one locale or price range. You can find a two-tiered market in Lake Forest, just as you can in the more expensive subdivisions of Stillwater or Avalon.

The short sale alternative

The chart here also demonstrates that short sales bring a higher price than foreclosures.

In a short sale, the owner owes more on the house than it's worth and needs to move. The sale is negotiated with the bank, which may agree to accept less than the full payoff on the mortgage at closing.

The owner cannot have cash in reserve, and some type of hardship must be demonstrated. The obvious hardships are death, divorce, loss of job and/or illness. But I've also seen hardships based on job transfers and the rising cost of homeowners insurance.

Short sales require patience and a lot of paperwork. The lender can stipulate that the shortfall be repaid and/or report it as taxable income. No situation or bank is alike and whether these things will happen is a tossup. But if the terms aren't to the owner's liking, he can always refuse.

A short sale has less effect on an owner's credit than a foreclosure, which is public record, according to the Distressed Property Institute. It also is not reported on a credit report, which can affect employment, particularly for those who work in finance or security, the institute reports.

Finally, like many a Realtor these days, I was recently on the sidelines watching as an owner had a house slide into foreclosure. Because only $50,000 was owed on a house that could have sold for at least $125,000, the owner lost a tremendous amount of money. There were several ways to have prevented this, if only the owner had confided the situation.

If you are facing this situation - or know someone who is - please let me help.

On to the 3rd quarter statistics:

Eastern Shore: 231 homes sold, down from 294 sales in the 2nd quarter. Roughly 25% of these sales were new construction (61) and 25% were short sales or foreclosures (62). Average price was $228,159, up from $223,353 in the 2nd quarter. Average time it took to sell was 157 days. Sellers trimmed on average 5% off of the list price in order to sell.

Fairhope/Point Clear: 85 homes sold, down from 114 in the 2nd quarter, but up from 78 sales a year ago this time. Average price was $242,220, compared to $259,943 in the 2nd quarter and $300,699 a year ago. Sellers here took on average 6% off list to sell. Average days on market: 158

Daphne: 113 homes sold, down from 133 sales in the 2nd quarter. Average price rose from $180,884 in the 2nd quarter to $200,757. Sellers took about 4.5% off list to sell. Average days on market: 162. (Because Lake Forest is now incorporated into Daphne in the MLS, true comparisons for Daphne last year are unavailable.)

Spanish Fort: 33 homes sold, down from 47 in the 2nd quarter and 36 this time last year. Average price rose from $254,780 in the 2nd quarter and $224,393 this time last year to $285,775 this quarter (attributed to growing use of putting Daphne's TimberCreek listings and sales in the Spanish Fort area because TimberCreek has a Spanish Fort zip code). Sellers took about 4.75% off list to sell. Average days on market: 136.