SHORT SALES, THE ISLAND YOU DO NOT WANT TO BE STRANDED ON!?!?!?!?
The industry has been trying though loan modifications to keep the borrower in their homes, leaseback programs, short sales and other creative processes. The last thing the servicers/banks/lenders want is to the see the foreclosure process in the courts. This delays the process and costs them more money.
Meanwhile, hundreds of thousands of foreclosures are stagnate or in limbo (Shadow Market?). In reality these assets are draining enormous industry resources that servicers could be and should be used “to engage and help”, distressed homeowners.
While opinions and reasons may vary, professional insiders are challenged by the dilemma of, “what is the best strategy in today’s market”? Should I throw a dart and hope it finds its target, literally and figuratively.
In the third quarter of last year (2010), Fannie Mae and Freddie Mac reported on a ratio between foreclosures and short sales, about 200,000 were foreclosures and about 40,000 were short sales. The ratio is approximately 5 to 1, this ratio should be much higher, short sales should be more dominate in my opinion.
The fact that foreclosures are outsourced to companies that, REO’s are driven by the “greed factor”, in other words, they only make money when a successful completion of a REO transaction. This accelerates the process since everyone in the REO circle, from the real estate professional to the asset manager, is “driven by getting the transaction successfully closed.
On the other hand, most of the big servicers have added short sale negotiators, departments, procedures, mod modules, and short sales modules. Yet, has the short sales period of time shortened for Lender approval or denial after the full submission package has been delivered to the Lender/Bank? The overall response from real estate professionals nationally is NO or NOT YET!!
RealtyTrac has kindly provided the following information: they are showing 314,002 “pre-foreclosure sales” (typically short sales) nationwide for 2010 based on their preliminary numbers. This represented 10 percent of all residential sales and REO sales accounted for an additional 16 percent. The average sale price nationally of a pre-foreclosure (typically short sales) was $203,306 and that was 15 percent below the average sales price of homes not in foreclosure. The average sales price for an REO property was 36 PERCENT below the average sales price of a home NOT in foreclosure.
According the RealtyTrac the difference between a pre-foreclosure and a REO successful transaction is approximately 21 PERCENT. In calculating this percentage, it should be a no brainer and does not take a rocket science to figure out which direction the Banks/Lenders/Outsourcers should go. They might be left on their own island
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