There was once a time when there were too many sellers and not enough buyers, but home inventory in the Twin Cities is at its lowest point in a decade and about a third of the homes on the market are foreclosures or short sales.
Short sales were supposed to be an easy way to avoid foreclosure, but while there is no shortage of buyers in that regard, FOX 9 News learned it can be the toughest sell.
Realtors say they are finding that some banks are a lot less willing to accept a short sale deal -- even when the offer is above fair market value.
In 2005, Melissa McNellis paid $199,000 for a 900-square foot condo in Richfield. Since she got married and moved to another home, she's been keeping up with her mortgage payments -- but even with a renter, she is still losing $700 a month.
"I thought I was doing the right thing by buying a home -- being responsible, and it backfired on me," she said.
McNellis said she wants to sell the unit and keep her credit clean, but the problem is that it's now worth less than half of what she still owes.
"We would never, ever make up the money that we're losing," she said.
Her agent, Chris Willette, completes more short sales than any other realtor in the state, but he told FOX 9 News he has recently run into a number of road blocks with loans where Freddie Mac is the end investor.
"I think there's too much red tape with some of the big banks to make a timely decision," Willette, of Edina Realty, said.
A spokesman for Freddie Mac wouldn't comment on the specifics of McNellis's case, but said the agency will only approve short sales in cases of serious hardship -- including death, divorce, disability, relocation for work, or military orders -- for customers who are not behind on their payments.
"So, people that are doing a short sale are trying to do the right thing instead of having the home go into foreclosure," explained Dawn Elderedge, of Edina Realty. "They want to work with the bank, try and spare as much of their credit as they can, and move forward and start a new chapter in their life."
Unfortunately for McNellis, even if she found a buyer willing to pay the full loan amount, no lender would approve the deal because the property is now valued so much less. That leaves her with few options -- including falling into foreclosure.
"We will have to," she said.
While Freddie Mac said they have helped 750,000 homeowners avoid foreclosure, both the realtors who spoke with FOX 9 News said they've never seen a single loan modification be approved.
WTTG FOX 5 & myfoxdc
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