East Bay Real Estate: 2010 Update – Short Sales Replacing REO’s!
June 16, 2010 by Jim Walberg · 1 Comment
Banks do not want to repossess homes anymore! They have more bank-owned homes than they ever wanted and there are too many more foreclosures sitting in the wings . Banks have learned that a Short Sale is probably less costly in the long run and instead of taking the home back they would rather work through the Short Sale as a much better alternative. ( A Short Sale is where the amount owned to the lender is more than the home is worth, and the bank is willing to less to satisfy the loan.) The real estate market place has changed dramatically in 2010 because of this banking-wide decision. Even the Federal Government has created ways for Short Sale sellers to be able to come back into home ownership quicker with new lending guidelines that don’t cause such chaos with these sellers credit ratings as long as they have been current with their mortgage payments – Home Affordable Foreclosure Alternatives, or HAFA.
Our first Short Sale was in January 2008. We found a buyer with an acceptable purchase offer and began the negotiation process with the lender. It was such a cumbersome and confused process that the escrow did not close until July of 2008 – seven months! Today, the time it takes to secure a lender approval for a Short Sale has gone from months to sometimes less than a week. Banks are now putting people and streamlined processes in place to handle short sales just in time. There are thousands of adjustable-rate mortgages set to convert over the next few years, with the Short Sales numbers expected grow - borrowers who can’t make their mortgage payments with the higher interest rates after the adjustments.
“Distressed” homes already make up a large chunk of the local real estate market. Nearly half of the homes sold in the Bay Area between September 2009 and this past February were short sales or foreclosures. And the market share of Bay Area short sales rose from 15.65 percent in September 2009 to 18.64 percent this past February. And, we still see some softening of prices in the $1 million+ price range in our region which may create a result of an increase of Short Sales in this price point as the year progresses.
Banks have a huge financial incentive to keep those homes out of foreclosure. The cost of maintaining such properties, which has been estimated at $50,000 or more per house, is their responsibility if a home goes into foreclosure. And the federal government has stepped up to the plate too, starting a new federal program that offers cash incentives for lenders who help to push short sales through – Home Affordable Foreclosure Alternatives, or HAFA
The sales are easier on borrowers, too. Short sales have a much smaller impact on a borrower’s credit score than foreclosures do, and borrowers are eligible for government loans sooner if they’ve sold their home as a short sale, instead of a bank foreclosure. But, just because someone has successfully completed a Short Sale, it may not mean that the forgiven debt on the home is now in the past. Click on this link for some Q&A on this topic.
We are available NOW to answer any of your questions about Short Sales and if this method of selling your home would apply to your situation.
Related posts:
- SHORT SALES Are Dramatically Impacting East Bay Real Estate!
- Some Bank’s Short Sale Polices Seem To Be Falling Short In The East Bay!
- East Bay Real Estate “Short Sales”…The Rest Of Jim Walberg’s Story!
Filed Under: Blog, Featured Posts, News, Real Estate, Sellers
Tagged: east bay real estate, East Bay Real Estate 2010 update, HAFA, Jim Walberg
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Check out what others are saying about this post...[...] short cuts to oust homeowners who haven’t mailed in a mortgage check for months.” Short Sales are still a large part of the market and this will significantly slow down the ability for Buyers to complete their purchases of [...]