Short Sale numbers are increasing while foreclosures slow.
According to recent housing data provided by Lender processing Services. Their statistics show that in January of this year short sales made up almost 24% of home purchases while foreclosures make up only 16%.
Speculation is that banks are more and more open to short selling homes for several reasons. One is they tend to sell for about 6% more than foreclosures do. They still sell below what the lenders believe to be “fair market value” but at a better price than foreclosures. In addition, there is less cost and chance of litigation surrounding a short sale.
They did not mention that banks have held foreclosures for months and months, waiting for Congress and regulators to determine how to handle the mass of issues surrounding foreclosures. Its nuts! The foreclosures sitting in the wings, what we call shadow inventory is building again to excessive levels. The floodgates are going to have to open, and when it does the statistics will change.
We are told, banks are eager to do short sales, I don’t buy it. Sure, with the magnifying glass from government regulators the large lenders probably feel that this is a safer way to go. There is a lot of talk of lenders working things out. I don’t see it.
Recently I submitted a very fair short sale offer to a national lender and they countered the offer at 100% higher. The value of the property just isn’t there and won’t be worth what they want for more than 5 years. So I asked them, now what? The answer was, let us refer you to the department that handles deed’s in lieu of foreclosure. They “may” or may not accept that. This property was marketed for months with incremental price reductions until we got an offer. That is the value of this property in the buyer’s eye. The lender says no. I reminded them that in Maryland it could take 600 days to complete the foreclosure process. They don’t seem to care.
I know, this is one incident but I have others where lenders refuse to deal with short sales, modifications and eventually sellers find themselves in foreclosure. It’s down right stupid. I even read that some lenders are offering sellers cash rewards to do short sales. Wow! How about just taking a reasonable offer? My seller wasn’t offered anything but a hard time.
I would love to share your experience with a short sale you are involved with. Contact me to post your story.