Short sales will surge this year
Short sales are rising sharply, offering many struggling homeowners a better alternative to foreclosure in many of the nation’s hardest hit states. In January, short sales rose 33% compared with 12 months earlier, RealtyTrac said.
During the month, 32 states saw year-over-year percentage increases in short sales. Even more encouraging, short sale deals outnumbered foreclosures in 12 states, including some of the hardest hit like California, Arizona and Florida.
January’s numbers look to be just the beginning. “[W]e believe 2012 could be a record year for short sales,” said Daren Blomquist, vice president at RealtyTrac. Banks are showing signs of being more open and willing to approve the deals — even if it means accepting less money. The average sales price for a short sale was $174,120 in January, down 4% from December and 10% year-over-year.
One of the biggest roadblocks for short sales has been the time it takes to get deals approved. That time shrunk slightly during the first quarter — to 306 days from 308 days the previous quarter — but many deals still fall through because the buyer eventually walks away. However, that will all change come June 1 when a set of new rules are put in place that will require lenders to make a decision about short sale requests within 60 days. Earlier this week, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, which will also require lenders to review and respond to short sale requests within 30 days and provide weekly status updates to the borrower if the offer is still under review after that time. Also helping to speed things along is the government’s Home Affordable Foreclosure Alternative program, which launched in late 2009, according to Charlie Engel, another spokesman for RealtyTrac. The program pays incentives to those who sell their home in a short sale rather than let it fall into foreclosure.
Smart Real Estate News & Commentary by Chris McLaughlin April 20, 2012
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