Tuesday, March 2, 2010
Short sales are becoming even more prevalent!
I have started to notice a shift in our Greater Richmond Metro market. The shift of what I've been noticing in my showings in the last several weeks is that the short sales have overtaken the volume of foreclosures for the largest volume of types of ownership.
This is noteworthy and somewhat surprising given the talk of the foreclosure shadow inventory. I still think that a lot of regular sales transactions are being held up by homeowners/would-be sellers that are either skittish about prices or their own economic situation (a.k.a. job) OR are under water (meaning the value of their home is less than their current mortgage balance). So, much of what's then available for sale are foreclosures and increasingly more short sales. Many of these short sales are still Unapproved by the bank at time of listing and while more of them are closing than in previous years, its still a bit of a gamble on whether it will ever close (only about 30% do).
If you are a tax credit buyer, then steer clear of all unapproved short sales, as they are unlikely to close by June 30th with any certainty. And, no matter what, if you do put a contract on one of these homes, then make sure you build some protective clauses that can get you out of the contract if it starts to drag on.
While these short sales present value on the sales price, they're often not the best value when factoring in deferred maintenance and less favorable terms on the seller-paid closing costs.