Are you a home buyer considering a Real Estate Short Sale when searching for Mesa / Scottsdale /Phoenix foreclosures? Are you a home owner wanting to save your home from foreclosure but unable to get a loan modification?
From the buyer’s side of the transaction you may be wondering if you have the patience to wait out the usual 2-5 month response from the seller’s mortgage lender(s) not knowing whether the sale will be approved. From the seller’s side of the transaction you could be wanting to avoid the stigma of foreclosure but not sure if you would qualify for a real estate short sale, or whether it would help you sell your home quickly in the Phoenix Area.
We have represented plenty of home buyers and sellers and are aware of the concerns that both have about the real estate short sale process. We are here to tell you there is good news for buyers and sellers alike. But first a little history about these kinds of Phoenix Foreclosures.
Real estate short sales first came into prominence in the Phoenix foreclosure market during 2008. At that time a very low percentage of short sales were successfully completed, perhaps 15-25%. By mid 2009 real estate short sale success reached 50% allowing more buyers to buy and more sellers to sell homes (though not very quickly).
Back in October of 2010 I wrote an article that likened short sales to playing roulette (see Short Sales: Chances of Closing These Phoenix Pre-Foreclosures). In other words you had about a 50-50 chance of successfully completing a short sale in the Phoenix real estate market. The reasons for failure became well known:
- Many sellers did not have great enough hardships to convince the banks to agree to a short payoff. This was especially true of owners that could make the monthly payments but only wanted to dump their homes because their values had considerably dropped because of the vast amount of Phoenix Foreclosures.
- Banks were not fully staffed and prepared to handle the volume of real estate short sales. Homes would sell quickly on the open market but get stagnated during the short sale process when both the home buyer and seller were forced to wait out the banks evaluation process. Some home buyers gave up on the process and turned to bank owned Phoenix Foreclosures.
- Banks did not yet fully understand they could save time and money by accepting a short payoff. Many banks made the decision to foreclose and go through that costly process only to lose even more money.
- The Federal and State Governments had not yet begun giving tax payer dollars to help subsidize bank losses and assist home sellers who truly had financial hardships through loss of employment or escalating variable rate loans (see ADOH $4500 Short Sale Help).
Near the end of 2009 and early 2010 real estate short sale success in the Phoenix Market hit the low 60% range but stopped growing. It then dropped and stagnated to between 44-53% until the spring of 2011.
Here is the good news I hinted at earlier in this post: during the spring of 2011 short sale success began to grow quickly. After a few months in the 60% range, short sale success jumped to the 70% range in September 2011 (see Phoenix Real Estate Short Sales for the full set of statistics) and peaked at 82.6%.
How much of an improvement is that? From my article in October 2010 until the present time that’s an improvement of 25 percentage points (from 50% to an average of 75%), or a 50% overall improvement in the real estate short sale success rate. This has contributed to a decrease in the amount of Phoenix Foreclosures.
Why the improved success? Because many of the obstacles mentioned in the bullet points above have been improved AND because real estate agents have become much more proficient at working with the banks.
Below I inserted the following image of a portion of our Phoenix Housing Tracker statistics:
Click here to see the whole chart: Phoenix Real Estate Short Sales. By doing so you will see the dramatic improvement since the early real estate short sale days in 2008.
- “Foreclosure Sales” means only bank owned properties and short sales (not normal sales).
- “REO Sales” are only bank owned home sales.
- “REO Sale %” shows bank owned sales expressed as a percentage of total foreclosure sales.
- “Short Sales” are those in which the bank accepted less than the mortgage amount.
- “Short Sale %” shows short sales expressed as a percentage of total foreclosure sales.
- “Cancelled Short Sales” shows the number of short sales that were cancelled during the month, usually because the mortgage holder would not accept the proposed sales price. These properties usually become REO property.
- “Short Sale Success” = short sales / (short sales + cancelled short sales). This is a ratio of short sales that successfully close escrow.