Buzz words that still make a buyer’s heart skip a beat… REO’s, Foreclosures and Short Sales. They’ve been around in large numbers for a while now.
No one disputes the fact that property values have declined. There’s not a whole lot of argument as to why it happened either. The 30+ % increases we were enjoying before April 2005 just couldn’t be sustained due to… (no point telling that one again) However, while numbers and statistics can be boring to the point your eyes strain to stay open, they tell the story straight and true. Ignoring these facts will cost you one way or another.
A house is worth what a buyer is willing to pay for it. Since REO’s and short sales have had a downward effect on prices, that has changed what buyers would be willing to pay in most neighborhoods. So again this year, we’ve had three main catagories of sales to keep an eye on; Resales, REO’s and short sales.
- Resales; Your typical homeowner moving for one reason or another. One or two decision makers involved. Responses to your offer can be quick. Tough times this year competing price wise with REO’s and short sales.
- REO’s; bank owned property, priced to sell quicker than their competition. Multiple parties involved in setting the asking price, and an asset manager selecting the best offer to work with. Normally the offer is subject to a board or panel for final approval. Initial responses to your offer from the asset manager can take up to several days, and a few more days for the final approval. Overall the wait is reasonable and the bargain makes the wait worthwhile.
- Short sales; homes for sale where the owner owes the lender more than the property will sell for. Approval of the sale amount from the lender is required in order to proceed and close. The seller isn’t allowed to receive funds at closing, so the price its sells for doesn’t matter much to the seller, unless the lender requires a promissory note for the balance. Because of this, sellers sometimes set low asking prices which affect neighborhood values, even though the lender won’t approve a sale that low. These can literally take months for the lender to research in order to decide to move forward with an offer or not.
Three areas I like to keep up with…
Since the beginning of this year, 144 single family homes have sold via Realtors and the local MLS system Realtors use. Out of the 144 total sales, 31 were bank owned, and 13 were short sales. Today there are 140 homes for sale; 1 REO and 34 short sales. The resale now has less competition and less downward pressure on the price. Asking prices range from $155,000 to $2,850,000. Sold prices range from $55,000 to $1,400,000.
Since January 1 this year, 126 homes sold. 19 were REO’s, 11 were short sales. Today there are 196 for sale, 1 REO and 27 short sales. Asking prices range from $369,000 to $5,999,000. Sold prices range from $250,000 to 3,650,000.
149 sold this year so far, 67 REO’s and 24 short sales. Today out of 107 offered for sale, only 6 are REO’s and 55 are short sales. Asking prices range from $79,000 to $ 775,000 while closed sales prices range from $32,500 to $450,000.
Bottom line is REO are now fewer and short sales, until something changes, are only short when it comes to closings.