Dan Greer – Realtor

I don’t want anyone to think that I’m unappreciative of the extra day we got this year, but it show how many of us procrastinate when getting things done. If I search the MLS for just the 28 days of February, we fell short of the 2011 sales number by 60 sales. But, add the 29^th day and we bettered last year by 4 sales! See what an extra 24 hours will do for all of us procrastinators patiently waiting to get things done!

If you’re still reading and listening to news reports I’m sure the negativity of all the housing gurus have you believing your home is worthless. When we hear that 1 in every 4 homes in Fresno are underwater, we automatically go to the pessimistic side and think the worst, but when we’re optimistically thinking, these numbers are telling us that 75% of our marker is sound and holding equity. Doesn’t that sound better? The truth is that our local housing market is not like most others and we’ve had, and will continue to have our share of distressed homes sales, but we are seeing good recovery with less mortgage defaults reported every month. 

Yes, distressed home sales (foreclosures and short sales) were 58% of the homes sold in February and year-to-date accounts for 55%.  These numbers may look large, but in reality they are just indicators of what is selling and not our housing market as a whole. And yes, if your neighborhood has a larger amount of distressed homes, your homes value will be affected, but that still doesn’t change the fact that 75% of our local homeowners are doing well.

And when you hear about homes being short sales, it’s usually not the positive you think about, but they are actually helping to bring our home values up. The table below shows February sales broken down by transaction type, and as you can see short sales have a much better average and median price than REO (foreclosed) home sales. The lenders are also seeing this trend and have become much more willing to approve short sales rather that going through an expensive and time-consuming foreclosure process.

 One thing we really need are more homes to sell.  Our housing inventory is critically low and we have less than a 3-month supply.  Qualified buyers are not finding the homes they want and when they do, many times it’s a multiple offer situation driving the offer price above asking price. This is also a great indicator that our housing market is improving and getting stronger. Anytime you have buyers willing to pay more, it becomes a sellers market and this will help all of us with better home values and hopefully more homeowner willing to sell.

If you or someone you know is looking to buy or sell a home, I would greatly appreciate you’re referrals.

Currently 63% of all MLS listed homes in Fresno and Clovis are considered distressed properties.  The term distressed are properties that are either in pre-foreclosure (short sales), meaning they have defaulted on their mortgage and the lender has filed a notice-of-default (NOD), or the lender has already completed the foreclosure and the property is now considers real estate owned (REO) meaning the lender now owns the property.

Pre-foreclosure properties are listed on the Fresno MLS as short sales. A few years ago the number of short sales in Fresno and Clovis were near zero, and REO properties dominated the market, but as home owners continued to default on their mortgages, the option of short selling became much more practical.  Homeowners that choose to short sell their home, are finding that it’s more strategic to exit their homeownership with a short sale verses foreclosure, largely because of the lesser negative impact on their credit allowing them to return to the housing market sooner.

Lenders were originally slow and even unwilling to allow a homeowner to shot sell their home, but as the housing market continued to struggle, they have begun to see the cost savings in allow homeowners  to sell short verses foreclosing. Yes, the lenders are still on the losing side of the transaction, but the typical homeowner short selling their home, leaves the home in much better condition than a foreclosed home, and with the short sale transaction, the home is seldom left vacant, creating less distress and keeping sale price higher.  

Below I have a data table showing the percentages for MLS listings in the month January 2012. If you scan across the data on the table you’ll see that 53% of the active listings are traditional home sales, meaning they are still current with their mortgage payments and have not defaulted. Again as you scan across you’ll see that 37% of the properties sold were traditional sales, showing that there are still homeowners selling that are not underwater. When you drop down to the short sale line, you’ll see that 29% are listed as short sales and 54% are pending, but only 21% are actually closed or sold as short sales. This is improving, but there are still large percentages that fail to get approval from the lender and eventually fall to foreclosure.      

A good argument to convince lenders to approve a short sale is the sale price. I have also included a bar graph showing traditional, REO and short sales median and average prices. As you scan across the graph you’ll see that short sales are nearly the same as traditional sales in both median and average price, whereas REO’s are below in both.  When negotiating a short sale with a lender this could be a point of leverage in getting an approval.

Even with this information about short sale verses foreclosure, I’m still finding homeowners that are underwater and in default on their homes mortgage, but choose not to short sell and allow the lender to foreclose.  Lender are preferring the short sale attempt before proceeding with their option to foreclosure, but homeowners are still choosing to live in the home until evicted. This is at a huge cost on their future credit rating, that could be thousands of dollars yearly in higher interests on credit and even being denied employment if they require certain security clearances. The option to short sale is in my opinion the best of a worst situation. It reduces short and long term credit loss and has a lesser blemish on credit reports, and in some situation has allowed these former homeowners to return to homeownership in as little as two-years verses 7 to 10 with a foreclosure.

If you or anyone you know needs assistance with a short sale, please have them contact me.  I would love to help!