PrintShort sales have jumped from about ten percent of distressed property sales during most of last year to 15.9 percent of home purchase transactions in January.
By contrast damaged real estate owned or bank owned properties accounted for only 13.4 percent and move-in ready bank-owned accounted for 13.8 percent of all sales, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions.
As recently as November of 2009, short sales accounted for 12.4 percent of the home purchase market, behind move-in ready REO at 12.6 percent and nearly even with damaged REO transactions at 12.3 percent.
Short sales typically result in lower lender losses and houses left in more saleable condition. Moreover, borrowers that agree to a short sale can often buy another house with mortgage financing after only two years. For borrowers going though the foreclosure process, mortgage financing can be unavailable for a period of five to seven years.
Short sale properties are most often purchased by first-time homebuyers, the January survey results revealed. Currently, mortgage servicer approval on offers for short sale properties can take several months, making these transactions difficult for current homeowners who often need to conduct not one, but two, transactions in quick succession. In contrast, first-time homebuyers more often have flexibility around the timing of short sale closings.
”Short sales activity took a temporary dip in November around the expected expiration of the first-time homebuyer tax credit,” reported Thomas Popik, research director for the Campbell/Inside Mortgage Finance survey. “Few first-time homebuyers wanted to take the chance that their short sale transaction wouldn’t be approved by the November 30 deadline. But now that the tax credit has been extended, we see first-time homebuyers once again snapping up attractively priced short sales.”
Survey results showed that short sales typically sell for only 91 percent of listing price. In contrast, move-in ready REO sells for 99 percent of listing price, on average.
The Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions polls more than 1,500 real estate agents nationwide and provides up-to-date intelligence on home sales and mortgage usage patterns
February 23rd, 2010 at 1:19 pm
Question: Are these stats for my region (Sacramento), my state (California), thw West, for the the country as a whole? It was not clear. It makes a big difference to me.
Thanks
Richard
February 23rd, 2010 at 2:44 pm
Richard,
This was a national survey.
Steve
June 15th, 2010 at 2:35 pm
My experience with short sales has been one of complete frustration. Out of approximately five short sales that I’ve written contracts on, only one has closed. Either the lenders don’t have an interest or incentive to close them and/or they are extremely understaffed. The listing agents never seem to be able to get a straight answer or any answer for that matter as to the progress of the file and when the lender will let us know if they are approving the contract. The system as it is today is an absolute farce. I cannot in good faith reccomend that my clients write a contract on a short sale until the system has been streamlined and the process has become more efficient.
June 17th, 2010 at 8:33 pm
In recent months I have seen a more aggressive approach on the banks behalf to foreclose rather than short sell. They are receiving investor insurance for a larger net if they foreclose and, subsequently, auction the property for much less than the short sale offer. This a an obstacle we cannot overcome so long as the bank’s losses are government subsidized.