Real estate short sale listings surpassed REO property listings (bank owned) for the first time in the Phoenix area real estate market. It appears more people are trying to avoid foreclosure and protect their credit rating as much as possible.
The chart shows 15,630 Metro Phoenix foreclosures to begin May 2009. 6,600 (42.2%) were REO property and 9,030 (57.8%) were real estate short sales. Although the total number of all Metro Phoenix foreclosures listed on the market dropped 4,326 from April 1, short sales have been increasingly popular over the last 12 months.
Many realtors and potential buyers have tried to avoid real estate short sales over the last few years. The reason: the excessively long time it takes to close a deal. I've written about this many times on this blog, but the average time it can take to close a real estate short sale is between three to five months -- compared to 30 to 45 days for a normal sale. There is no logic to this lengthy process, except to say lenders have been very busy handling the workload. Also lengthening the process: various levels of lender management approvals, different opinions about property values, buyers and realtors not submitting all the forms required by the lenders, and different opinions about acceptable levels of losses on loan portfolios.
Lenders claim to be working to shorten the process. They are aware of the growing number of real estate short sales and are trying to manage their losses on the front-end -- as opposed to the back-end (the foreclosure process and trustee sale).
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