So I'm in class earning my Certified Distressed Properties Expert (CDPE) designation, and who am I surrounded by? REO agents. Hmmmm...why are REO agents learning to help people avoid foreclosures? Don't they make their living selling foreclosures for their clients - the banks and asset managers?

I think you all know how I've always felt about short sales. I preferred root canals and blind dates. Up until recently, only 1 in 8 were successful, and I hated to set my clients up for heartbreak when there were so many great REOs to pick from. Now the approval rate is about 1 in 3. Things are looking up for distressed sellers hoping to avoid a game-ending foreclosure, as well as for buyers looking for a bargain.

Short sales can still be a nightmare when one of the agents (especially the listing agent) isn't experienced at persuading banks to accept less than what's owed. While my own closing ratio is already very high, I'm told the average approval rate for CDPE designees is over 80%. With over 10,000 CDPE designees nationwide, you sellers may want to ask your agent to show you their credentials.

Why are REO agents getting CDPE designations, then, when they get a listing if the bank forecloses? Someone moved their cheese - the writing is on the wall. Whether forced or just resigned to it, banks that were unwilling to work with people struggling to meet their mortgage payments are much more receptive to short sales now. More short sales means fewer REOs. Fewer REOs means fewer listings for REO agents.

Contrary to popular belief, homeowners can't just do a short sale to avoid their debt. A homeowner with $400,000 in liquid assets isn't likely to be approved for a short sale just because he no longer wants to owe twice as much as Joe Neighbor, who bought the same house last month for half the price. There must be an actual hardship, such as loss of income or impending loss of income, divorce, a death in the family, relocation demanded by a job, or other hardship that prevents a homeowner from making payments.

It's exciting to be in a room full of real estate agents that have a common goal of helping people avoid foreclosure. Short sales are still miserable; sellers still walk away empty-handed and without a home. But at least sellers who absolutely can't make their payments walk away with much less damage to their credit than a foreclosure or a bankruptcy would cause.

Guess if things ever slow down I'd better revise my own website and take back all those dismal things I've told reporters about short sales. With REOs in short supply and privately-held homes still largely overpriced, short sales are becoming increasingly attractive to my buyers.

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