Foreclosure crisis presents opportunities.

• Author: Taylor, Mike
• Position: SMALL [biz]

Not long ago houses were half-jokingly referred to as ATMs because the "homeowners" (how's that for a misnomer?) could repeatedly take out home-equity loans or refinance on the assumption that property values would keep rising indefinitely.

My, how that's changed. Now talk of real estate centers on auctions, foreclosures and short sales--cases when the bank agrees to accept less on a property than is owed.

When Denver Realtor Kelli Paddilla decided to start specializing in short sales in 2005, she had to fly to California to attend short-sale seminars because, she says, none were offered in Colorado.

Now she's a recognized distressed-property and short-sale expert. Last year Paddilla, managing broker at real estate firm Key Concepts, sold 42 properties that were either bank-owned or short sales. This year her office is on track to sell 75 to 100 such properties.

"Short sales are always a better alternative than foreclosures for the bank and for the seller," Paddilla says, citing one rare exception she oversaw firsthand. "I had one listing recently where the tenant burned the house down. There's no reason for that seller to continue the short-sale process."

But according to Denver attorney Sara Mobley, who deals with many loan modifications and short sales, about eight out of nine short sales nationally fail because they don't meet the guidelines that the lender must adhere to.

Paddilla also blames inexperienced Realtors for hampering the short-sale process by flooding banks with short-sale proposals that have no chance of being accepted. As an example she sites an agent in her own office whose short-sale packet Paddilla reviewed.

"The seller was a compulsive gambler," Paddilla says. "He's gambling away his life savings and can't pay his mortgage. He sends us a bank statement with everything blacked out on it. So my assistant, who's also a private investigator, holds it up to the window, and it's Blackhawk this, Blackhawk that. ... So someone's going to tell me that I should even hit the fax machine and send it over to Bank of America and waste their time? I don't think so."

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The distressed real estate market demands different services, and Ryan Lantz, who is only 31 but has been in the real estate business about a dozen years, has tried to fill different needs as the economy and real estate markets have changed. He started out in commercial real estate in San Francisco, then came...