Checking The Pulse Of The Kansas City Real Estate Market

Many lenders holding notes on homeowners who are about to default on their loans have realized it makes sense to try to work out the best possible deal BEFORE the homeowners move out of the home and/or give up and move on with their lives. Doing so can help keep the lender from having to deal with yet another REO asset on their books. It’s really not a matter of whether the lender is going to lose or not, because they ARE going to lose. Rather, it’s about accepting the lesser of the two evils and that’s led to Short Sales surpassing foreclosures as it relates to distressed home sales.

Bloomberg reported that nearly 24% of distressed sales today are Short Sales, while nearly 20% are foreclosures. The Bloomberg report shows that the average Foreclosure listing sold for 29% less than non-distressed comparable homes, while the average Short Sale sold for 23 percent less, so you can see the advantages some lenders are realizing by accepting Short Sales in today’s real estate market. Given this info, Short Sales are sure to be a prevalent type of listing for the foreseeable future.

While more Short Sales are getting approved, it doesn’t mean the process is easy. In fact, it’s just the opposite. The Short Sale process is NOTHING like buying a bank property because with bank properties, more or less, they can be closed in a predictable time fashion (once you’re able to get the home under contract). But a Short Sale requires getting the seller’s lender to approve of the Short Sale and that’s no easy task. A lender accepting a Short Sale means the lender accepting less than the full amount the seller owes on the home… and no lender is required to accept ANY Short Sale. They have the right to foreclosure on a property if a seller stops paying back their loan and they will exercise that right if they feel it best serves the lender’s interests. 

I’ve seen estimates vary greatly but it’s generally accepted that more than half of Short Sale listings never make it to the closing table. Think about that for a moment before you consider engaging in purchasing a Short Sale. Home sellers NEED a patient buyer who is willing to wait it out for as long as necessary to see if a Short Sale can be obtained. From the buyer’s perspective, there’s really no reason to mess with a Short Sale if you’re not patient because Short Sales are never closed in any predictable time-frame. I network with many top agents and the consensus is the average Short Sale listing that closes takes more than 4 months to do so… And that’s the Short Sales that DO close.

Posted by Jason Brown