'Short sale' an option for some homeowners

CONCORD, N.C. -- A "short sale" is considered hope for homeowners facing foreclosure. The bank agrees to take less than what you owe on your mortgage. If your house sells, you get to walk away.

But is this the best option and what does it do to your credit?

"I've been dealing in short sales for 14 years," said Concord broker Geoffrey Lamb. "We're seeing this more in new construction neighborhoods."

Lamb took NewsChannel 36 reporter Bobby Sisk to the Cabarrus County side of Highland Creek to display some of his homes.

"This is definitely not your bottom of the line house," Lamb said, talking about a three-bedroom house built in 2004.

The house first went onto the market two years ago. When Lamb got the listing in September, he negotiated with the seller's bank to get to a price he considers a deal.

"It should've sold for approximately $220,000 to $230,000 and this would've been 2006, 2007 market prices. This year it has been at $179,000 quite a while. We've reduced it to $144,500," he said.

In Mint Hill, Lamb showed us a custom home built on more than an acre in Arlington Hills. At the time it was built, it appraised for $875,000.

"Today it is $650,000 and potentially lower than that," Lamb said.

If these houses sell, Lamb says their owners will take a hit, but it's better than the alternative.

"Typically, when a short sale shows up on your credit report it is only there three years like any other entry on your credit report, and then drops off," Lamb said. "A foreclosure might be there for seven to 10 years like a bankruptcy."

At any given time, The Lamb Group keeps 60 to 80 short sale listings statewide. He says in most cases, the banks would rather sell at a loss than end up owning the house.

"They try to figure out what the value is. If they feel it is much lower than the mortgage then they are willing to talk," Lamb said.

If the banks think your house is worth more than your mortgage, Lamb says they will not consider a short sale.

Lamb says if you buy a short sale now, you'll likely be in great shape when the market recovers.

And if you are on the selling side, his instructions are very clear.

"If you're not at the right price, you are not going to sell," he said.

Lamb said he's had homeowners call him a week before they were losing their house. He says most brokers need at least three weeks to negotiate with the banks.