After reading the papers and hearing the news, you probably wonder if property foreclosures are finally reaching an end. The truth is they're not: foreclosure numbers went up last month. Homeowners are surrendering their properties to the banks, often without a fight. A "Deed in Lieu of Foreclosure" is one option that homeowners are using to get out from under their mortgages without having to go through the entire foreclosure process. They are signing over the deed, turning in their keys, and walking away from their homes.
Working something out with the bank in advance is less detrimental for the homeowner and has less negative impact on their credit than going through an entire foreclosure proceeding.
This summer another batch of home loans throughout the United States will reset to a higher interest rate. This will push more homeowners to default on their loans, forcing many of them into Deeds in Lieu of Foreclosure or short sales-- selling their home for less than is owed on the mortgage. Therefore, the expectation of more homes hitting the market will likely become a reality. Some economists predict the worst would then be over.
What does this mean for us Realtors? The answer to that depends on your point of view. Every market has it opportunities. Granted, with the economy struggling, finding buyers is more challenging. But, more homes to sell, better pricing (a buyer's market), together with low interest rates, can translate to us moving more homes and improving statistics. And improving the statistics will improve public perceptions and increase consumer confidence, which will make more on-the-fence potential buyers venture into the market.
This information should motivate us to get out there and reach out to the additional 750,000 homeowners that may experience this type of hardship this year.
Realtors, become proactive and start getting involved in your communities. They are crying out for help and YOU can assist them. If you do not know how, ask your broker or manager to create methods and systems to help you to reach out to these troubled homeowners. Together we can make a difference and help our community and our market.