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An Overview of Foreclosure and Short Sale Homes: An Interview with Steve Katsaros of Real Estate One

By Steve Katsaros

Tell us a little bit about your company and its foundation.

Real Estate One Family of Companies makes the complex process of buying or selling a home as simple as possible. Ranked as the 10th largest broker in the nation, every day is spent striving towards our mission of creating the best real estate experience through our family of services. Above being the largest broker in Michigan, one of our proudest achievements was becoming one of Michigan's Top Workplaces in 2011. Our commitment to being the best continued when accomplishing the Top Workplace award again in 2012, along with being ranked in the Top 5 of the state. The good news continued in 2013 when Real Estate One Family of Companies was ranked the 3rd Top Workplace in the state and 51st Top Workplace in the nation.

Established in 1929 by Staunton Elsea, the first office of Elsea Realty and Investment Company was opened on Fort Street in Detroit. Forty years later, Elsea Realty became Real Estate One when Staunton's son, Dick, negotiated a merger with three other well-established metro firms. These firms included Mathers, Stevens and Martin Inc. Realtors, Deremo and Sons Realtors as well as Gordon Williamson Co.

Becoming a one-stop shop for our clients' convenience was essential to our many years of success. Insurance One Agency joined the family in 1971 and John Adams Mortgage followed a year after in 1972. Three years later, another important member, Capital Title Insurance Agency was added into the selection of services. Relocation America and Rental Management One are also affiliates of the Real Estate One Family of Companies. We support our clients through every aspect of their real estate transaction, ultimately saving their time, money and stress.

Since its beginning the company has been known as a market leader. Many of the common marketing tools used throughout the country started here. Real Estate One was the first company to have multiple offices, to create homes books, to initiate a computerized MLS, and to host Open Houses. We evolve as our clients' needs progress. Our website attracts over 2.3 million unique visitors a year and continues to grow at a rapid pace. We also launched a mobile app, which allowed us to provide GPS-enabled maps featuring a search of Michigan MLS properties delivered at the touch of a finger.

Creative thinking, long term planning and quality service have led this company in terms of our success. We look forward to assisting you in making your real estate transition smooth and rewarding. From our co-workers to clients, the members of this family are dedicated to the core values of excellence, caring, integrity, teamwork and empowerment. These beliefs play a role in every business opportunity and have become a standard for our company to live up to day by day.

Our clients receive quality, family-grown service when working with a Real Estate One Family of Companies employee. Serving our state for 84 years, Michigan is more than our market.

What are some of the services your company provides?

We are a full service real estate broker serving all of Michigan. We represent thousands of homeowners who want to sell or lease their house, and thousands of buyers who are looking for houses to buy or lease as well. We also work for numerous banks & HUD on foreclosed properties and we also help investors from all over the world purchase properties all over Michigan. Our "family" of companies includes a mortgage company called John Adams Mortgage; a title agency called Capital Title Insurance Agency, an insurance company called Insurance One, a relocation company called Relocation America International, an investment company called Investments One, and a property management company called Rental Management One. We have 4 Real Estate brands we do business under too, Real Estate One Inc., Max Broock, Johnstone and Johnstone, and Charles Reinhart.

What is the process of pre-foreclosure like? Can it be reversed if I pay off my debt?

In Michigan we have a 6 months right of redemption. Once a homeowner is behind more than 3 months in their monthly mortgage payments the lender will take the mortgage note and sell it at that county's Sheriff's sale. Then the clock starts ticking for the homeowner. The homeowner will have 6 months to redeem/try and get it back their property. Once the 6 months are up the bank/lender will start the eviction process if the homeowner is still in the house. There are other options for the homeowner during this time as well.

What are the advantages and disadvantages of buying a home in foreclosure?

Many of the properties that have gone through the foreclosure process are distressed or have been vandalized. As a result they have to sell for less money on the market and this brings down everyone's values whether you like it or not, it becomes a comparable for future sales and makes everyone else's house worth less in the same area.

Not everyone should buy a foreclosure because they are hardly ever in tiptop shape and often times require some type of repairs to bring them up to local codes and to where you can live in them. Most lenders will only lend money when all the utilities can be turned on or the client is willing to use some type of rehab loan FHA 203k that allows them to roll the repair money into their new mortgage. The property must then appraise at the new value of the purchase price plus the repairs rolled into the new mortgage.

What is a short sale?

A short sale is when the bank/ lender is owed more than the house is worth in today's market. The homeowner should have some type of "hardship" too, ie. death in the family, divorce, loss of job, disability, or job transfer to name a few.

Let's say the homeowner bought a house for $200,000 in 2008, took out an interest only mortgage loan and today the house is only worth $150,000. The "short" fall is around $50,000. So the question is who will take the loss, the bank or the seller / homeowner? Many of the sellers in the last 6 years could not afford to bring that shortfall money to the closing table for a variety of reasons. Legislatively, laws were passed to allow the homeowner to complete a sale and not be responsible for the balance, and they would not have to file an IRS #1099 for the balance (Pay taxes on the loss).

How does this help the homeowner who is behind on payments?

A short sale is a much better option than walking away from your house, which is what many people did after receiving bad advice. Plus it's really the 'right thing" to do to help move these properties and insure they don't become distressed and consequently bring down values not only on their house, but the whole sub, city and surrounding areas.

How much will a foreclosure or short sale negatively impact my credit score?

Foreclosure 150-250 points, depending on how many late payments you had. Short sale 100-150 points, again important not to be late on your monthly payments if possible.

How does the bank determine the selling price for my home?

The Bank will hire other Real Estate Agents to complete a "Broker Price Opinion" of Value (BPO) The agent does a MLS search for current, pending and sold listings in the same area and as similar to the subject property as possible, or in a small number of cases they actually hire an appraiser to determine value, more time and money involved this way.

What is the best way for people to get in contact with you or your company?

Email or Cell phone is best for me.

For company contact info visit www.realestateone.com and click on the appropriate drop-down. Or call the main office at 248-208-2900 and they can connect you to the right department or person to help you.

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