The volume of notices of default to San Diego homeowners was down 39% in the first quarter of 2010 compared to the same period last year.
If the trend continues, this potentially bodes well for local home prices. We’ll have to wait and see. We still want to see a large decrease in the numbers of foreclosed-on homes.
A comparison of foreclosed-on properties for the two periods shows relatively no change.
Lately we’ve seen fewer bank-owned properties hit the market while there has been in increase of listed short sales.
We’ve all been hearing about a “shadow inventory” of foreclosures - a supposed chunk of bank-owned homes, waiting to be released in one big barrage. At this point, no sign of it. Some think it’s still coming. Some don’t believe it exists. We will see.
So for now with the onslaught of short sales, what does this mean to you?
If you are upside-down on your mortgage and you have been unable to get a loan modification, chances are higher now than last year that your bank(s) will approve a short sale that will let you sell and help you to avoid foreclosure.
If you are a conventional seller, selling with equity in your home, you will still need to prepare to compete with lower priced homes as short sales are tending to sell very low.
If you are a buyer, looking for a great deal, you may find one in a short sale. Just be sure to bring loads of patience with you as look for a home. Some short sales are starting to be processed faster, but many (including properties with B of A/Countrywide loans) are taking up to five or six months to process.
I’ve said that I believe 2010 will be the year of the short sale. More short sales are being approved and making it to actually close, but it is still taking most banks far too long. Buyers, sellers and the entire real estate market need Bank of America to follow Well Fargo/Wachovia’s lead and gets moving on their short sales!
Many agents agree that San Diego property prices on the lower end of the range have started to stabilize. The word on “the street” is that now we may see a price dip in the mid-range or the $550,000 - $800,000 price range properties.
Investors and home buyers are out in force, looking for the great deal, in a lower price range. Fortunately for the market, this means that buyers are snapping up many well-priced, distressed properties as quickly as they become available.
Now we are hearing from lenders that we should expect a new wave of foreclosed properties, in a little higher price range to be released on the market very soon. Some say August 31. Some say Oct 15. The word is that the banks will be releasing an additional 35,000 foreclosures nationwide. We are not certain how many of these will be in San Diego, but we all know that we are one of the harder hit areas, so I am expecting a big chunk of the foreclosures to be here.
This is good news if you are shopping for a property in that price range. If you are thinking of selling in that price range, be prepared to price your property to compete.
What about the moratorium? It was announced in my office meeting yesterday that there may be another statewide foreclosure moratorium bill, delaying banks from filing for foreclosures on primary residences. Note that this moratorium (and the previous bills) will probably have little affect on slowing the tide of foreclosures, as banks can easily get exemptions by showing that they have specific loan modification programs in place. Many banks have already filed for the exemption from the next bill.
The facts in this article are believed to be accurate, but are not verified. Some of this info comes from personal experience. Some of the information is “word on the street.” Things are changing quickly now and I want to keep you “in the know.”
As always, to buy or sell in San Diego, contact Margot.
619-825-5086
Looking to buy a low-priced, super good deal property in San Diego? You are not alone.
There are deals to be had indeed, but you need to be ready to move and be prepared to offer above asking price. And if you have it, cash is king.
One of my agent friends said he is advising all buyer clients to expect to make offers on up to twenty properties before getting an acceptance. Of course it depends on how aggressive your offers are, but irregardless, expect to work for the best deals.
According to a July 20, 2009 article in the Associated Press, this situation exists in several markets. “It is especially acute in heavy foreclosure areas such as Las Vegas, Phoenix, southern California and southern Florida.”
Read the entire AP article.
If you are looking to buy in today’s real estate market, you are probably looking for a great deal. Distressed properties can be the route to go.
Short sales and foreclosures are both “distressed property” situations. They are hugely different from each other and it’s important to know the difference as one could work for you and the other may not.
In short: Foreclosures are properties that the bank has taken back. A foreclosure transaction can go smoothly and along a normal real estate transaction timeline. Short sales are being sold by the individual who owes more than they will get in the current market. They must ask the bank to forgive some of the loan. These listings can be good buys, but require a lot of patience on the buyer’s part as they take a very long time and often don’t make it to close.
Read on for more info on these two types of distressed property sales…
About Foreclosures
Foreclosures, also called “REO’s” or bank-owned properties are just that; they are properties that are owned by and being sold by banks. A property owner has gone into default on their home loan and the bank has repossessed the property. The bank lists the property for sale in the MLS.
The purchase of a foreclosure property is relatively straight forward. We see the property listed in the MLS. We view the property and if you like it, we make an offer. The bank responds hopefully positively and we go into escrow and close within a normal period of time.
Foreclosures can be good deals for investors and home buyers.
Note that banks are not required to make many disclosures that Sellers are normally obligated to make and it’s important as always to get a good physical inspection.
About Short Sales
When someone wants to sell their property, but owes more than the property is worth and isn’t able or willing to bring the extra money to close, a property is listed as a “short sale.”
These differ from foreclosures in that they are still owned by a person, not a bank. Short sales do sometimes close escrow, but it’s important to note that they also differ from foreclosures in that they often don’t result in closed escrows. (In 2008 only 24% of short sale escrows in San Diego actually closed.)
The snag with short sales is that the person who is listing the property, the Seller, is not the same person or party that decides if they will actually sell for the listed price. So the Seller lists for a low amount, below what they owe. After an offer is made, the bank sees the offer decides if they are willing to take less than they are owed.
As you can imagine, it can take a while to get a response from a bank, (sometimes one never comes.) There is often more than one bank involved and the approval must come from both banks. And sometimes even if you do go into escrow on a short sale property, the bank can change their mind along the way and pull out.
I steer most home buyers away from short sales. They usually take a very long time and often don’t close. This can be frustrating for most people. You may be a candidate for making offers on short sales if you are an investor with patience and are not emotionally tied to a quick or positive response.
I will be happy to send you a list of distressed properties. Just send me an email or give me call to let me know what areas fo San diego interest you.
