By signing into my site, you can access your favorites from any computer and get e-mail updates when new listings come in that match your recent searches.
July 12th, 2011 3:21 PM by David W. Welch
I have written before that time is not on our side when it comes to real estate transactions. There is a reason "time is of the essence" is a standard clause in all our contracts. Banks just don't "get" either of these points when it comes to negotiating short sales. Around 60% of the pending foreclosed and "equity" sales contract close each month, but only about 10% of the pending short sales get closed. The way I count this closure rate is by taking the number of closed sales and dividing by the number of pending contracts. Last month for instance there were 7,404 pending short sales, but only 676 closed short sales or about 9.1%. There were 1,447 bank owned properties under contract and 815 or 56.3% closed. Equity sales accounted for 1,729 contracts and 985 or 56.9% closed.
The inordinate amount of time banks take to act on short sales is primarily responsible for such a low closure rate. Last year there were 7,142 closed short sales. There were 7,414 short sales that were withdrawn from the market last year and another 3,126 that expired. Currently, there are 3,299 active short sale listings and another 7,388 pending short sales. So far this year 3,060 have been withdrawn from the market and another 971 have expired. Looking more closely at the pending short sales, there are 2,530 that have already exceeded their expected closing dates. There are another 1,586 expected to close in the next 30 days, yet fewer than 700 actually will close based on past experience. My gut reaction to all this data is that there is probably no more than a one in three chance of any short sale contract actually closing. There are a lot of reasons for that, but time is the underlying issue. People just plain get tired of waiting.
I have been working with a couple since April that are hoping to get a pre-approved short sale finalized before we put their home on the market. Their bank, Bank of America, expects to be able to issue final approval of a submitted contract within 30 days with this pre-approval process. The sellers are getting a bit frustrated with the process and the waiting, but if this works, our future buyer won't have to experience the same frustration. That should improve our odds significantly of having a successful closing.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone