What’s All This Talk About Short Sales?

Short sales.  They’re becoming more and more plentiful in Orange County and a recent article in NuWire Investor reported that they are projected to increase during 2010.  In 2009 our company was able to complete many short sale transactions but that’s not common in the industry. In reality, a lot of buyers have trouble getting short sales.  Why?  There are several reasons but some of the big ones are that short sales typically mean that the banks take a loss on the property and also short sales cost the banks major time.  According to the website Housing Predictor, only 1% of all the homes that face foreclosure will be approved by banks as a short sale.  Of that small percentage, only 8-12% of those homes actually make it through the process and get sold as a short sale. So what does this mean for our housing market?In 2010 the number of short sales is expected to increase.  However, if homes are sold at a loss, does that mean home values will stay steady or even sink? Here’s the irony – according to The OC Register home prices are actually expected to post a gain by later in 2010.  How come?  Starting in April, the US Treasury Program is enacting a program that will prompt banks to move homes through the short sale process faster, so many of the big banks are increasing their staffs as a result.   The hope is that the banks will do more short sales than foreclosures.   Even though the homes may sell for less money they will help the housing market gain momentum, which is projected to offset the lower sales price.Although short sales are known as being time consuming, and are sure to remain time consuming even once this program goes into effect, we’ve been so successful at handling these transactions by putting in the time.  No matter how long the banks put us on hold, we’ve hung on waiting (and we were even profiled in USA Today for our persistence)!  The bottom line – short sales are a reality of 2010 but they are not expected to affect the housing market – and we’re standing by to make sure deals get made.This just in - we recently put a short sale on the market in Laguna Beach Village.  The home was purchased for $1.4 million and is now on the market for $1 million.  Walk to the beach and be on a quiet, child-friendly street!