Real estate short sales continued to gain on REO property (bank owned) in the Phoenix area real estate market during May of 2009.
Read the chart in this manner: 6,896 sales during the month of May were Metro Phoenix foreclosures. 5,862 were REO property, or 85% of total Metro Phoenix foreclosure sales. 1,034 sales were real estate short sales, or 15% of total Metro Phoenix foreclosure sales. Refer to my last post for the total sales in the Phoenix area real estate market.
This is a trend that has been gaining steady momentum for the last 18 months. Previously, many people snubbed their noses at real estate short sales because they were much more difficult to buy. REO property is much easier to acquire because the sales cycle is similar to that of a normal sale. Difficulties included three to five months sales times, lack of feedback from the banks holding the notes, and rejections of offers after buyers had waited for extended periods of time.
Currently, more people are interested in real estate short sales because they are becoming a larger part of the market. Excluding them would be to ignore 23% of all active listings for sale in the Phoenix area real estate market. Banks are trying to be more proactive with their handling of real estate short sales. The numbers of short sales continue to rise each month as more homeowners are trying to avoid foreclosure.
Are not most of the short sales in Arizona mis-leading? In the state of Arizona is there really difference, from the lenders perspective, between a foreclosure and a short sale? If that is true. Is it not technically just a better sounding term? Or are there real benefits to short sale over foreclosure?
Posted by: William | June 15, 2009 at 09:47 AM
Sorry for the late reply.
There is a difference between short sales and lender owned properties. The banks acknowledge the difference by having separate departments for each type of sale.
Banks prefer not to foreclose on a property because there are quite a few legal, administrative, and carrying costs associated with owning a property. Even though the eventual sales price may be the same, banks can save the costs I just mentioned -- and not have to own the property.
A short sale is also beneficial to the owner of the property. Although different experts will give different accounts, there seems to be a general consensus that a short sale will save between 50 to 100 points on a credit report. In other words, a short sale will result in less of a reduction on the owners credit score than a foreclosure.
Posted by: Ron | June 22, 2009 at 11:38 AM