By Eric Czarnik
C & G Staff Writer

It’s a situation becoming more and more common in metro Detroit. A homeowner wants to sell his house, but his home is worth less than his mortgage. He’s stuck, he’s underwater and his luck is short.

Is it time for a short sale? A couple of local real estate experts agree that it might be — under certain circumstances.

Realtor Mike Sher of Max Broock Realtors in Bloomfield Township is also a short sale instructor for the Metropolitan Consolidated Association of Realtors. He said a short sale is a deal between a homeowner and a lender that allows a home to be sold for less than what is owed on the mortgage.

“It’s based on some level of hardship,” Sher said. “It’s for those sellers to avoid walking away from their house or being foreclosed upon.”

According to Sher, a lender may allow a short sale based on life difficulties such as unemployment, forced relocation, a medical emergency or divorce. Predatory lending practices are sometimes also cited as a reason, he said.

“Something had changed in their life that made it so they would’ve not been able to qualify for an ARM (adjustable-rate mortgage) or some sort of program where the interest rate went up,” he said.

Lenders have greater reasons to allow short sales than mercy or compassion. Home foreclosures are an expensive process, and a short sale might ease losses, Sher said.

In practice, a short sale can make a difference. Sher said he recently did a short sale for a property owner who had owed more than $800,000 on a property. The short sale allowed the property to be sold for around $490,000.

But the process takes preparation. A good Realtor can negotiate with a lender to come up with an agreement, Sher said.

“Meeting with a Realtor at the beginning is a good place to start,” he said. “Seeking the advice of an attorney during the process is advisable.”

Rochester Hills resident Erik Ambrozaitis is a Realtor from Remerica West Real Estate. He said roughly 20 percent of the inquiries he gets are about short sales — something that would have been unheard of five years ago. He believes the reason is that 40-60 percent of metro Detroit homeowners are underwater with their mortgages.

Abrozaitis underscored the need for a lawyer to ensure that all the contract’s legalities are protected and double-checked. He also said a title company could help protect the process with the proper title work.

But seller beware: A short sale could bring consequences. Both local Realtors said every short sale is done on a case-by-case basis, but Ambrozaitis said a seller sometimes might not be allowed to buy a home for up to three years afterward.

“There’s no real center, one-way, one-rule philosophy that’s completely in place just yet,” he said. “It’s still the ‘wild west’ out there.”

For more information on Max Broock Realtors in Bloomfield Township, call (248) 644-4700. To reach Realtor Erik Ambrozaitis, call (248) 601-0450.

You can reach Staff Writer Eric Czarnik at eczarnik@candgnews.com or at (586) 498-1058.