“Short Sales” bring home prices down to an affordable level, but are the homes REALLY for sale?

Virginia REALTOR® Frank Borges LLosa did some digging into the Northern Virginia short sale market and made a startling discovery: Only five percent of short sales actually close. Frank’s post was picked up by Business Week’s Hot Property blog.

Another VAR member, Jeff Royce, remarked to me that he is seeing average home prices come back to earth in many Northern Virginia localities because of short sales and foreclosure sales, but with so few short sales actually going to closing, he questions whether or not the bank really has any intention of selling.

Is this isolated to Northern Virginia, or is it more widespread? What are you seeing?

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4 Responses to “Short Sales” bring home prices down to an affordable level, but are the homes REALLY for sale?

  1. I could easily observe this phenomenon as a realtor in Toronto, we can meet with more and more foreclosures recently and the reason is the inability to pay mortgages. That`s sad because it`s a long procedure and nobody cares for these houses during this time. When the time comes for selling unfortunately is not desirable anymore because it was neglected so the property can lose it`s value. I would say it take time but the homes are definitely for selling.

  2. Though there are tons of short-sales in Northern Virginia, it’s not isolated to just NoVA. Neither is the experience involved, which is not a good one.

    The average percentage that I’m seeing and hearing of offers on short-sales actually being accepted is about 5 percent. That’s why so few buyers and agents are excited to move forward on a short-sale. They’d rather write on foreclosures/REOs that they know are not subject to “third party approval” (aka veto).

  3. Jay Thompson says:

    It’s not just Northern Virginia. It’s the same way in Arizona, and I suspect everywhere in between.

    I haven’t run the numbers in Phoenix, but it’s got to be very low. The last short sale listing I had had a grand total of 1 showing in 2+ months.

  4. In Prince William County we are listing and writing on short sales(subject to a 3rd party approval) with mixed results. i.e. the bank receives an offer above list price, they want to increase the list price and wait for more offers. Or they want to take forever to approve or disapprove, leaving a frustrated buyer and seller. Showings are slim also.

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