Banks, Short Sales And Foreclosures (Oh My!)
I was talking with a buddy of mine today about short sales in Tallahassee, specifically about what it is like dealing with local banks and national lenders in the sale of a home that is sold "short." Distressed properties are becoming a larger percentage of homes sold now, and it appears that most banks "get it" and are working to push the market through this difficult phase.
But sadly, not all banks really "get it." They believe that if they keep procrastinating, then the market will improve and their losses will be reduced. But this is not going to be the case.
The banks that recognize a falling housing market will find themselves in a better position approving a short sale than those banks who just fold their hands and wait for the full foreclosure process.
When all of the dust settles, I think banks and lenders will find that they will net 10% to 15% more in a fully marketed short sale than they will in the sale of a home that has gone through foreclosure. The primary reason is that the short sale homes that we have handled have been maintained far better than ones that have gone through the long legal process of foreclosure. Additionally, the stigma of a short sale seems to be far less than that of a foreclosure.
And this is no minor issue. Florida remains jammed with a huge backlog of troubled loans. The state set a record for bank repossessions just last month, with more than 13,200 homes seized by lenders, according to RealtyTrac. These foreclosures are soon to hit a market already plagued by a glut of homes for sale. If you did not see the most recent Tallahassee Foreclosure Report, I recommend viewing it to observe the current rising trend in foreclosure sales.
Short sales and foreclosures will dominate the 2011 housing market, so the banks that move the fastest will find themselves beating the market. I just hope that all our local banks in Tallahassee "get it."