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MLS Search | The Wired Buyer | The Wired Seller | About Destin | Local Market Pulse | Destin Links Destin, FL - 1/30/09 Everyday I'm asked, "am I better off waiting for the foreclosure than I am putting in an offer on a short sale?" My answer is "usually". Why? Because the chances of a shortie closing are only running about 10%. There are several factors that all have to be in place for the shortie to close: 1. The seller must prove his hardship and insolvency by disclosing his current financial situation to his lender. 2. The lender must weigh the cost of foreclosure vs. the mortgage loss write down. While the lender is evaluating more and more shorties are piling up. 3. The buyer must be willing to wait anywhere from 90 days to as long as a year for the shortie to actually be granted by the seller's lender. Once a property is foreclosed then it is promptly relisted on the market as an REO or Real Estate Owned by the foreclosing bank. In most instances the property is listed at an attractive price and closing can occur within 30 days- most are snapped up quickly. Short sales are being listed by Realtors at extremely attractive prices that may not even be approved by the seller's lender and are basically wasting everyone's time- and add to the lengthy time it takes to receive an answer from the bank. Let's take a look at the current short sale situation in the greater Destin area:
12 1/2% of all active listings are currently short sales! When I ran these same numbers a few months ago we were right around 7%. Short sales are becoming more and more prevalent and the time frame that it takes to close one if it indeed closes at all is not a winning situation for anyone - buyers or sellers. Anyone who bought in 2004 - 2006 is faced with the reality that their property has reduced in value. Selling short seems like a worthy solution when in reality it is a longshot. Fannie Mae has launched pilot projects in Orlando and Phoenix intended to reduce foreclosures by pre-approving short sales – agreeing on a price and the loss the bank will take prior to a deal even being made. Fannie Mae hopes the program will improve the popularity of short sales with real estate agents, who now tend to shun such deals for the reasons above. This may be the solution we all need to move forward. I've even considered bringing the Destin short sale market to a screeching halt myself. It is conceivable that one buyer could make 375 offers on every short sale without putting up a penny in deposits. By using the FAR 9 contract along with the FAR Short Sale Addendum the offers would read that the effective date of the contract would be the day the seller's lender agrees to the offer and that the earnest money deposit would be placed with the title escrow agent from within 5 days of the effective date. By writing in the additional terms that the MLS status must be changed from "active" to "contingent" the property would effectively be removed from the active market upon acceptance from the seller while all await word from the lender. Further, by putting a closing date of 30 days in the contract it would be a miracle that a bank would have an answer within 30 days...if nothing else this would prove the point of how ludicrous the current short sale situation is. *All statistics are from the Emerald Coast Association of Realtors. Kerry McNulty, The Wired Agent cell: 850.642.1081 toll free office: 800.225.7652 Receive a week's worth of the HOTSHEET - Destin's brand new listings and PRICE CHANGES emailed to you every Monday: Previous Market Pulse articles: April 8, 2008 February 13, 2008 January 14, 2008 December 19, 2007 October 3, 2007 August 1, 2007 July 6, 2007 June 2, 2007 May 1, 2007 April 2, 2007 March 1, 2007 January 16, 2007 November 1, 2006 October 12, 2006 August 16, 2006 June 27, 2006 April 8, 2006 March 31, 2006 Feb 21, 2006 Jan 3, 2006 Oct. 10, 2005 Sept. 16, 2005 Copyright © 2008 TheWiredAgent.com -- ALL RIGHTS RESERVED. |