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Editor’s note: This is the first installment in a two-part series on the state of the real estate industry in Macomb and Wayne counties. Recently, a number of local Realtors spoke with C & G Newspapers about how they have adapted to the changes brought about by the current poor economy and housing market, as well as how technology has changed the way real estate transactions are conducted and where they believe the local housing market is headed. This week’s article looks into the changes effected by the economy. Look to next week’s Homes section to learn more about technological advances in, and the future of, real estate.

By Christa Buchanan
C & G Staff Writer

Across the country, Realtors have been posed some pretty steep challenges recently — a poor economy, followed by an unprecedented number of foreclosures and the resulting overabundance of homes on the market, and declining home values among them — but local Realtors are beginning to see the light at the end of the tunnel.

As Michigan was the first state to really get hit by the housing crisis, Realtors throughout the state have already stepped up to take those challenges head-on, putting them — and hopefully, Michigan — ahead of the national real estate tussle.

They’ve been taking courses on the ins and outs of short sale transactions, and due to the vast number of people who have lost their homes, many Realtors have realized the need for rental homes and have added leasing agent to their repertoires.

The fastest selling homes on the market right now are those being sold as a short sale — a transaction in which the lender is willing to sell the home for less than what is owed if the homeowner can prove a financial hardship, such as loss of job, medical bills, divorce, etc.

“No one ever heard of short sales a few years ago, but now it’s becoming quite common,” said Realtor Bill Finn of Century 21 Town & Country in Grosse Pointe, adding that short sales can help homeowners who are facing a hardship avoid foreclosure.

To that end, Realtors across the state have been studying up on the short sale process in hopes that the local housing market will begin to stabilize.

“About two years ago, I saw the writing on the wall about short sales and started taking classes. Now, I have a very efficient process in place in dealing with bank-owned properties,” said Rich Sparks, a Realtor with Keller Williams Realty in Sterling Heights.

Due to the fact that foreclosures have a much deeper economic impact than short sales on both homeowners and lenders — foreclosed homes also tend to need more repairs, which can scare some buyers away — short sales are becoming a much more popular option.

“Banks are encouraging short sales over foreclosure because they lose about one-third less on a short sale. If you’re in over your head, find an agent who’s knowledgeable about short sales as soon as possible — they can help you get out of a lousy situation much more quickly and less painfully than if you wait and go through foreclosure,” Realtor Gary Patrosso of Keller Williams Realty in St. Clair Shores said.

“Short sales are huge right now. I have six short sale listings and three are pending right now. For the last six months, that’s been a major part of my business,” said Patrosso.

With so many people facing upside-down home values — owing more than their home is worth — Finn said he expects this trend to continue for a while.

And for those who are looking to purchase or sell a home via a short sale, patience is key, as closing on a short sale is a much more involved process — there’s more paperwork; it takes longer, etc. — than that of a traditional sale, it is essential to find a Realtor that is knowledgeable about the process.

“Right now, it is paramount that they deal with a full-time agent because short sales are much more precarious than regular sales,” said Sparks.

However, said Patrosso, the benefits far outweigh the extra time and energy a short sale takes.

“With the economy the way it is in southeast Michigan right now and the problems with Chrysler, we’re going to be seeing more people who need that help. A short sale can save people’s credit. It may bruise their credit, but it doesn’t destroy it — foreclosures destroy credit,” Patrosso said. “With a short sale — if they can get over that bump they had and get back on their feet — they can buy a house again in less than a year.”

In the meantime, those people need someplace to live, so local Realtors have stepped up to lend a hand in getting these homes occupied by also working as leasing agents — and the rental business is booming.

“I’ve been seeing an awful lot of rentals. People are walking out of their homes and looking to rent,” Finn said of the impact upside-down home values and foreclosures have had on the sudden increase in rentals.

“Obviously, they can’t buy a home and have to live somewhere. So what I’ve been doing is go out and find a lease for them, help them to get into a new place. I try to keep them in the same area, so the kids are in the same school, and they’re not disrupted as much,” said Patrosso of clients that are seeking a rental after doing a short sale.

Overall, the Realtors agree that the most important thing is getting people into homes so that homes aren’t empty and values can begin to stabilize.

For more information, contact Century 21 Town & Country at (313) 886-5040, Keller Williams-St. Clair Shores at (586) 541-4058 and Keller Williams-Sterling Heights at (586) 979-4200.

You can reach Staff Writer Christa Buchanan at cbuchanan@candgnews.com or at (586) 498-1061.