It has finally happened. The Short Sale shift has arrived and I have seen it.
Working with Short Sale clients I have always been on the receiving end of phone calls from real estate investors. Mostly ones who were flippers, looking to buy a property, throw a minimal amount of (mostly cosmetic) improvements into it, and sell it quickly at a profit.
As the market slowed locally, quick flips became more difficult as inventories and the average Days-On-Market increased to where the economics of the quick flip evaporated faster than $2.00/gallon gasoline. My Short Sale listing inventory increased and they continued to sell, but a bit more slowly and more typically to people who wanted to live in the homes they purchased.
Frankly, this works out better. Short Sales were never well priced by flipper standards and the offers from buyers who were looking to flip the homes reflected that. Most flippers were looking to buy at a price versus market value ratio that was usually lower than the lienholders would accept and negotiating a Short Sale with the lienholder is a lot of work to engage in when you know in your heart that a lender will never accept the deal. But I worked up each offer packet and tried to sell it to the lienholder, more often than not with the only result being a lienholder who felt their time was wasted with a ridiculously low offer and a buyer who was annoyed they waited so long for a response from the lienholder only to have their offer rejected!
But like I wrote, that's all changed and for the better. Based on my recent experience in the Short Sale world, the flipper has been replaced by the "holder". In the past couple of months I have been receiving calls and offers from investors wishing to purchase well priced short sales, but not to flip them... rather, they want to rent them, hold them and make their profit money when the market rebounds. They are not looking for the quick flip, so immediate resalability is not an issue and buying below market is their desire, but they do not need to be as low, because they plan to do any renovation work when the market rebounds and the upside of their purchase/sale ratio is significantly higher because the house is worth more. And what makes it better is that these offers actually get accepted by lienholders because they are realistic.
Is anyone else seeing similar behavior? And now that we are making the shift, how about more flippers becoming holders?
+++ +++ +++ +++ +++ +++ +++ +++
If you or someone you know in the Dallas area is facing foreclosure and is interested in exploring the possibility of a Short Sale, please visit my website at www.HomeSalesRemedy.com for additional information and to request a personal consultation.
;)
Links;)
Tags (Tag Cloud);)
Archives
STEVE - I haven't worked much with short sales, but I do feel that they are most valuable to investors because investors have the time to wait to see if an offer gets accepted. For the homebuyer that has a sense of urgency, short sales seem to be a bit too risky because the buyer is tied up while the bank decides if they will accept the offer or not. The other problem in this area is that too many agents have jumped into taking these listings without proper training. This makes the chances of many of these deals getting approved even smaller. If there was a short sale specialist around (like there are on AR), then I would consider these better opportunities.