Are short sales a player in the Maple Valley real estate market?
You betcha!
Approximately 21.5%, nearly a quarter of all active listings on the market right now are short sale listings; homes being offered for sale subject to the underlying lenders agreeing to take less than what is owed on the property.
What’s really interesting though is that 50% of the pending sales in our market are short sales, while only 7.5% of the sales closed in the last six months were short sale. This big disparity between pending and closed sales is best explained by using a funnel as an analogy for the process of closing a short sale. From listing through recording, a short sale transaction is more complicated and time consuming.
A regular sale goes as follows: seller lists home > buyer makes offer > buyer completes inspection > appraisal > buyer’s new loan is approved > then sign at escrow > record. Voila….SOLD!
It’s not so easy in a short sale transaction. For the short sale, there’s a very large (and often lengthy) step between buyer making an offer and buyer’s loan being approved….it’s the process where by the seller must convince the lender to take less than what is owed on the property and release the lien in order for seller to consumate the sale and transfer the deed to the new buyer.
Each file must be put customized to the seller’s lender’s standards (Wells Fargo has one process, Chase another, BoA yet another) submitted and then flow through a series of steps (some of which are very poorly managed on the lenders end) before the sale can then resume it’s normal course……buyer then gets inspection, appraisal and so on.
Because of the decline in values in our area, many, many home owners who must sell (for a variety of reasons) have to either go the short sale route, or give their house back to the bank. For most people, the benefits of a short sale over foreclosure far outweigh the inconveniences sometimes experienced during the short sale process.
Back to the funnel analogy.
The last short sale package I put together a few days ago for a seller was 63 pages….that’s a LOT of information for the lender to review. Now multiply that by all the other short sale submissions they are being barraged with from all over the country and you can see how only a few trickle out ever month in one small geographic area.
There have been new guidelines recently announced which are aimed at streamlining the process, but I’m remaining cautiously optimistic.
In the meantime we keep at it and hopefully are helping become part of the solution, by helping owners sell and avoid foreclosure through the short sale process.
