According to Ron Peltier, chairman andchief executive officer of Home Services of America, Inc the second largest U.S. residential brokerage, there has been a ”dramatic shift” in banks willingness to complete short sales vs a foreclosure. Distressed sales brokered by Home Services used to be made up of 60% bank owned properties and 40% short sales, but that ratio has now flipped according to Peltier in an interview with Bloomberg. Reece & Nichols is a wholly owned subsidiary of Home Services of America, Inc.
Typically, short sales are completed at an average discounted price of around 20% vs a non-distressed sale vs a bank owned property with an average discount of about 40%, according to Realty Trac, Inc. Short sales increased 19% in the 2nd quarter vs the previous quarter while foreclosure sales were flat. That’s better for banks who lose less money and better for sellers as the stress level from completing a short sale vs having a foreclosure action completed against them is generally less.
This is also good for the overall economy and health of the real estate market as the downward pressure on home prices is somewhat abated by the higher prices realized from home sales completed in a short sale. It’s further good news as there remains over 6 million homes delinquent or in default, many of which will need to be sold.
According to the National Association of Realtors, almost a third of all transactions in August were either bank owned properties or short sales.
Home values have declined 31 percent in the last five years, according to the S&P/Case-Shiller index of values in 20 U.S. cities, as competition from foreclosures pressures sellers to lower their asking prices. The resulting crash was worse than the 27 percent plunge in values during the Depression, according to Stan Humphries, chief economist of Zillow Inc., a Seattle-based real estate information company.
The drop in home values has pushed almost a quarter of U.S. mortgage borrowers underwater, meaning their debt is more than their homes are worth, according to a report by CoreLogic Inc. (CLGX), a real estate data company in Santa Ana, California. That so- called negative equity prevents owners from conducting traditional deals because they would have to pay the difference between their loan balance and the sale price.
The drop in home values has pushed almost a quarter of U.S. mortgage borrowers underwater, meaning their debt is more than their homes are worth, according to a report by CoreLogic Inc. (CLGX), a real estate data company in Santa Ana, California. That so- called negative equity prevents owners from conducting traditional deals because they would have to pay the difference between their loan balance and the sale price.
If you believe you may benefit from a short sale, call an experienced and knowledgeable agent to help you review your options. We’ve closed hundreds of short sale transactions with every major lender and many small to mid sized lenders across the country. Give us a call today and set up a no-cost, no-obligation meeting.
