Finally… the banks are getting a bit more realistic about how they deal with pre-foreclosure properties – more commonly known as ‘Short Sales’ – properties that are being sold for a price that is less than is needed to pay off the associated mortgages.
According to RealtyTrac, the time it takes to sell a short sale has decreased by 4.3% in the past quarter – though it’s still an eye popping 245 days. For the delay and hassles, the buyers of short sales typically see a discount of 21% which is up from 14% a year ago. Keep in mind that these are National figures, and locally while the marketing time is very similar the discounts for short sales are closer to 7-12% when compared to non-distressed homes.
We are definitely seeing banks get more realistic, as well as increase their capability to process short sales, which is wonderful. However they are still far from an easy way to buy. Today 30-40% of all short sale offers still fail, and they take somewhere between 3-6 months to get approval and another 30 days to close – so only those buyers with a great deal of patience and tolerance to risk get the payoff of the discounted sales price.
Of course, it’s also important to know that the discounted sales price isn’t just for the hassle and risk, it often is mostly because of the relative poor condition of the properties where significant cosmetic fixes and deferred maintenance are the common themes.
For more information on this story see: Bloomberg – Home Short Sales Increase…