As many of you probably know, Redfin has a great feature that allows you do download the results of any search to an Excel file. One aspect of this feature that you may not be aware of is that one of the fields that is populated on the resulting spreadsheet indicates whether or not each listing is a short sale.
Just for kicks, I downloaded the data from Redfin for all closed sales records for single-family homes in King County within the last month. According to the Redfin data, there were a total of 1,312 sales within the 11/23/2009 to 12/19/2009 period. 124 of these sales (9.5%) were flagged as a short sale.
Here’s a histogram of the price breakdown for the 124 short sales in the last month:
For comparison, here is a histogram of the 1,188 sales that were not marked as short sales:
42% of short sales in the past month were for homes that sold for $300,000 or less, while only 34% of non-short sales fell in that same price range. The biggest difference in the breakdowns above seems to be in the $300,000+ to $400,000 range. Above $400,000, there wasn’t much difference in the breakdown between short and non-short.
As for what is currently on the market, 16.4% of the 6,649 single-family active listings are marked as short sales.
Here’s the histogram of asking prices for current short sale listings:
And here’s the histogram of asking prices for non-short sale listings:
Interesting difference between those two. Not much of a difference between the current listings and the solds on the short sales, though.
Looks to me like short sales are skewed slightly toward the low-end, both in listings and in closed sales. I also find it interesting what a large proportion of the active non-short listings are priced over a million (16%) vs. the proportion of closed non-short sales over a million (just 4%). Looks like a lot of wishful thinking out there in the high end of the market.
It’s been my observation that there are still a lot of short sales out there that are not flagged as such on Redfin. Probably not Redfin’s fault, more likely the listing agent who doesn’t properly x the short sale box, and saves it for the agent remarks.
10% this is nothing yet! Red Fin will start doing short sales again because of the sheer magnitude that are coming. It will be stream lined and much more efficient then it was in 2009.
People do NOT have the funds to close combined with the 6-10% to sell in Washington State!
Always LOOK for short sales. There will be GEMS and many will be found as short sales. Never let anyone tell you to AVOID SHORTSALES in your search.
Sorry, but you would have to be brain dead to buy a short sale, or to list your property as a short sale.
Banks need to, and people need to, just let the properties foreclose. It’s the cleanest break with, in my opinion, the least liability.
Banks have been asking for financial information to short a property or modify. I’m thinking it’s just a matter of time before some bean counter figures to go after the deficiencies.
Give the banks nothing. Banks are the enemy. Whatever they are doing it will come back to bite you. They are not there to help you do anything. Banks are only interested in how much money they can steal from you.
When you buy a short sale you are paying full retail. Banks will never, ever, cut you a deal. If it’s cheap, there is a reason for that. These are crafty life long swindlers, and con men.
I don’t believe the stats anymore.
I know some people in L.A. that haven’t made a payment in over a year (they did receive their NOD) and are moving out in January (Foreclosed on).
Does/did it ever show up on any of the Foreclosure websites as a preforeclosure, foreclosure or even a tax lien?
Nope.
Agent slugfest!!
In this corner: Ray ” Hot Chili” Pepper, who suggests that you always look for short sales.
And in this corner: David ” Losh Fu” Losh, who suggests that only the brain dead buy short sales.
Ringside seats are fifty dollars each, payable to Ira ” The Shark” . Cash only.
RE: David Losh @ 3 – Hmm, now that you mention it, “Nearly 10% of King County Buyers are Brain Dead” would have definitely made a better headline :^)
RE: Ira Sacharoff @ 5 – Sign me up! Hopefully it’ll be a good show with free popcorn!
I put my money on Ray because David is soft, David said “sorry” before he called shorts brain dead.
These short sale numbers (as a percentage of sales) are going to go much higher in 2010.
TheTim, How did you get around the 500-result limit on searches? I’ve tried to combine searches from multiple rectangles, but it’s hard to coordinate.
RE: The Tim @ 6 –
Except the 10% figure would be on the low side.
By Jillayne @ 9:
I’m not really sure what you’re saying. If that means you think banks are going to get to be smarter, that’s quite an outrageous prediction, because I’m not sure banks ever learn that they’ve done anything wrong. They just keep doing the same stupid crap over and over and over. Short sales could have been a lot larger as a percentage in 2009, and banks could have lost a lot less money if that had not been the case. But banks are too "golly" stupid to realize that.
On the other hand, there is the new Obama plan going into effect, and that will probably work fairly well at increasing short sales, at least where there’s only one mortgage to deal with.
RE: James Baker @ 10 – I searched all of King County, and did multiple searches, narrowing it down by price range until it got under the 500 limit. Then after copy-pasting all of the different spreadsheets together in Excel, I did a remove duplicates function to delete the ones that are right on the borders (e.g. – a $500k house gets caught in the $450k – $500k and in the $500k – $550k).
Tim, to follow up on my last post, what you need is a graph of short sales per month. I’m not sure if Redfin gives you that. If not let me know.
Anyway, I think it will show only a slight increase numerically (but significant as a percentage), and that isn’t because there has been a shortage of sales for banks to approve. It’s because the banks were sitting on their butts 22 hours a day and now they’re just sitting on their butts 21 hours a day.
RE: Ira Sacharoff @ 5 –
I’m gonna lay off David for awhile and not argue with him. He seems to have been exceedingly busy with new websites and endeavors. He maybe tired. So I will simply say this……………………………….
A. Never bet against Ray
and
B. Never fight the Fed
(I had a root canal today and I think I caught a COLD so I’m in no mood…I rented Inglorious Bastards two days ago. I think its time to watch)
I’m going to go with David’s position more than Ray’s. The thing is, if your house is a short sale, it has to be listed as such. So that’s where I disagree with David.
There are some short sale situations that can be worthwhile, and they can be worthwhile for investor types, but other than that, they’re a waste of pixels on my screen.
RE: Ray Pepper @ 15 – Oh, I am not betting against Ray. I’m preparing the popcorn!
And now that Kary’s joined in, I’m making a double batch…
It’s a thriller!
RE: Ray Pepper @ 15 – How much is the hassle of a short sale worth? $500?
Ardell even said it. She had an offer, the bank didn’t take it, the bank sold the property for $100K less. The bank doesn’t care how much they sell the property for, the person holding the Note might, but the bank just doesn’t care, they don’t have to.
It’s not that they are busy, or that they don’t know what they are doing, They are simply trading property loans for other loans that they think will pay off.
A foreclosure is cash money. They will sell into a cash position as they need to, or want to. Out of the massive foreclosure inventory that must be out there, they can cherry pick the ones that will sell for the most, the least, and the ones to hold on the books.
In my opinion all of these properties are just free money at this point. I just don’t see where banks are dependent on making home loans any more. I really can’t imagine banks going into the home loan business again any time soon.
They have already shaken out all the money they can from that industry and have moved on. The banks are cashing out. They don’t want to make any more loans that have even the most remote possibility of coming back. They are clearing out inventory.
So if you are a buyer, you better be the best buyer in the world. Buy what you can afford to pay off quickly. You will need to pay down principle balance in order to have equity.
It just occurred to me that most people aren’t seeing what’s coming.
We are going back to a time when you bought a property and paid it off. You need to be smart about what you buy and need to buy properties that have value. People will need to be more self reliant because the banks will be lending less and less on properties.
There will be no more that banks will lend you into an equity position. You will be building equity by paying down the principle.
That’s the way it’s always been and always will be.
I could ramble on about FHA and VA, then banks going into the home loan business because they saw a bunch of suckers, I mean people who wanted to be investors, I mean sincere, honest, people who really would give them the gift of making mortgage payments on an over priced asset of questionable value.
Sorry, I just want to be clear.
Ever the diplomat, I’m going to agree with David and I’m going to agree with Ray ( but I’m still the bookie here for the agent slugfest)::
1. Debt is bad, and turns you into a slave. It’s especially bad in a declining market. Deutsche Bank estimates that half of US homeowners are going to be underwater by 2011, and one way to avoid that is to pay as much cash as possible.
2. Ray has a lot of experience with short sales. I have a little. My experience is that they’re a pain in the butt and take forever, if they close at all, and are not for the impatient. Some of them get approved and do offer opportunities to buy at a significant discount, but the vast majority of short sale deals do not end up closing. Maybe Ray has the tricks to expedite short sale deals. I sure as hell don’t.
By AMS @ 18:
It’s really how much reward do you need? How much of a lower price do you need to possibly get stuck into renewing your lease? How much of a lower price do you need to spend 4 months dealing with a transaction that much ultimately never close?
Beyond that, short sales even in a perfect environment would command a lower price because move up buyers who were selling first wouldn’t be part of the demand curve.
RE: Kary L. Krismer @ 22 – As the “savings” approaches zero it might not be worth the time and trouble. A high income earner probably isn’t interested in saving $500. A lower income earner probably is looking to save a buck or two.
(I’m looking for the break-even point between these two. I’ll still buy a ticket to the event…)
RE: David Losh @ 19 – I doubt Ardell purchased the place looking to lose $200,000, plus or minus. Did the lender think the value was going down by another $100,000? I am not sure. Did the lender think the offer presented was fair? I am not sure. Do short sales come with problems? Yes, and that’s exactly why they are priced lower.
RE: AMS @ 18 –
Well, you better all get used to short sales because they will be with us for a very long time. I will educate you ALL that the process has steadily gotten faster and more efficient.
We don’t list short sales only represent Buyers for them. I currently just have 2 ACTIVE Buyers in the short sale process. One just entered into it yesterday and when it closes I assure you it was a great value proposition for the Buyers. The other one in Ballard is a simple “no brainer”. The townhome is 80k less then the other 2 across the street with the same sq footage and construction date.
We are all obviously not Buyers here but what you must remember people are and always will be. Their numbers may diminish but there will always be buyers. They must look into short sales, foreclosures, and conventional sales. Never eliminate any in your search for a GEM. The fact is this. When OUR short sales have closed they always have been the BEST value proposition @ that particular time for that specific area. The key is to keep the deck in your hands and never let the bank set the rules. In fact, I had 2 Buyers that were able to move into their short sale purchase and live for FREE until it closed. One Buyer got 6 months for free and the other 2. Its all how well the Agent negotiates with the bank, seller, and the LA.
However, I’m seeing a far more brisk closing then it was in my past SS.
Buyers, to answer the question I always get asked….”Will Banks look at my offers I make on Short Sales or do I have to come in at full price?”
The answer is absolutely YES. Make your offer based on your DD and market research. Yesterdays SS (which we were advised would be approved) was 15% under listing price. The home itself is already 100k less then any other comparable comp within a mile.
Always look at short sales!
RE: Ira Sacharoff @ 21 –
I am very curious what the pains are. Is it the clients nagging in the back seat with “Are we there yet?”, or is it that there is a lot more paperwork involved for the agent?
RE: Ray Pepper @ 25 – “Buyers, to answer the question I always get asked….’Will Banks look at my offers I make on Short Sales or do I have to come in at full price?’”
No buyer should ever make an offer above what the home is worth to that buyer.
RE: Tyler @ 26 – I know a guy who waited 30 days for a reply from the lender, only to find that in that 30 day period a slightly higher offer had come in. What’s the price of 30 days lost?
Maybe it is an issue of, “Are we there yet?”
RE: AMS @ 28 –
AMS…the Buyers Agent did not do his job then. Your friend was not represented properly. Ask him how the 22SS was filled out. Was the home immediately placed STI after being signed off by the seller?
It was the Buyers mistake. There should have been relatively 0 days lost.
RE: Ray Pepper @ 29 – Oh, yes, you are correct. The problem is that the unsophisticated buyer doesn’t know how to navigate the market. I also recommend the right agent on the seller’s side. If the seller selects the wrong agent, then it’s pretty much game over.
RE: Tyler @ 26 –
It’s not the buyers who are the problem or the sellers. It’s more like the layers of an onion. You can say you’re giving 30 days for the lender to approve the sale, but if the buyers really like the house they’ll wait longer. I had one where the bank approved the sale after four months and then a second lender seemed to appear out of nowhere who then demanded a few more thousand, and then the first lender did another broker price opinion, which delayed things even longer…It’s not simply more paperwork, it’s more the unexpected delays and uncertainty, even if you make a full price offer on a short sale….You aren’t simply dealing with a seller, but at least one lender in addition, and possibly a short sale negotiator….I’m happy to do them, if only for the experience, but it’s far less than a sure thing.
OK, short sales have always been around. I’ve done a lot, maybe more than a few. In the Windermere/RNT office there are about 30 pending and 10 closed. I did about 3 of 4 I don’t really remember.
I had a contact at Chase who ended up with a lot of paper even before the WaMu deal was done. He and I talked about the process a lot over the course of about a year. On his desk were over 100 files and there were 30 on his managers desk. They were only processing deals that made sense.
Real Estate agents and Loan Originators throw these deals togehter then present them like they are golden. In 75% of the cases some agent has thrown together a pile of poop and thrown it at the lender who has a lot of alternatives.
The lender can foreclose, the lender can modify, the lender can just sit on the property, the lender can go after a defiency by judicial foreclosure, they have nothing but time. They want as much as they can get so they will sell the property for retail pricing.
Prices are going to continue to decline. Banks are artificially propping up prices because they want as much as they can while they wind down this home mortgage scam, but once that’s over, it’s over. Banks will move on to commercial lending, plant and equipment kind of stuff that pays big and fast.
Do you really think any large banking institution wants to deal with a 30 year loan? That’s a mom, dad, and the kids kind of investment.
Good Gawd! For all the really smart guys here on this blog that know soooooooo much about the Real Estate business, who don’t need to listen to Realturds, this is like an ametuer hour.
At foreclosure, mom, dad ,and the kids go to auction with the little IRA money that they have been saving and buy a house for cash, then resell it on a contract, a Note, and Deed of Trust. I’m saying a home loan is, was, a small time invetemtn, and will revert to being a small time investment.
RE: Ira Sacharoff @ 31 –
Ira the joys of a short sale are that if the Agent does his/her work properly the Buyer can walk at ANY point while waiting for Lender acceptance. We encourage our Buyers to ALWAYS keep looking. Never wait for anyone if another GEM pops up. Its also up to the Buyers Agent to diminish to 0 the amount of other offers that can come in. If the Listing Agent is unable or unwilling due to Lender restrictions, we advise our clients of what can and may happen.
I find the short sale process is no more difficult then any other transaction. Its the competency of the Agent who took the listing, the seller, and of course the Buyers Agent and your motivated Buyer who has been educated as to the process.
The transactions I have a difficult time with our Agents who work PT and cannot takes calls 9-5pm. There seem to be an increasing amount of these and its a terrible shame. I also do NOT engage with MTG Reps who cannot answer the phone and avoid B of A at every turn. Furthermore, I find Talon Title/Escrow to be very poor in customer service and management.
But, hey…..I cannot love everyone……………….can I?
My sitiuation: Feel Free To Weigh In….
1. Involved in a short sale with two banks.
2. Offered 75% of ask; seller accepted; bank ordered a appraisal immediately.
3. Appraisal came back only 10% higher.
Q1. I’ve heard that banks usually take 85% – 92%, so at 90% of BPO/Appraised, are we in the sweet spot?
Q2. Also, there are two banks involved, any one here know how long this will take/ what I should do to speed up the process? Hell, what is the process from here on out?
Real Estate Agent tells me to be patient, but was hoping to have more insight from the Seattle Bubble Gang.
Just curious if any of you have any experience with this…
RE: Andy @ 34 –
Andy we know nothing about your transaction, lender, or Agents involved. Your Agent is getting paid to work for you. Call him/her. Nobody can give you GOOD advise without knowing all the facts.
who told you this?
“Q1. I’ve heard that banks usually take 85% – 92%, so at 90% of BPO/Appraised, are we in the sweet spot?”
Show me some proof or a link?
Here is my advise to you keep looking while you are waiting.
RE: Ray Pepper @ 35 – I had someone fairly high up in a bank’s short sale department tell me they’d accept about 90%. The BPO came in higher than the price.
RE: Kary L. Krismer @ 36 –
which bank…..??
This can be quite useful info.
RE: Andy @ 34 –
Banks like to stick to the BPO, but 90% of that is a good spot. The problem with the two lenders is that the second is slated to get nothing. If it is the same lender for both the first, and second, you have some chance, but if it’s two different lenders they will double team you, and play one off the other.
The important thing is for you to have a strong loan package. You should exceed the the loan requirements for income to debt ratios, from a reputable lender, and have great credit.
No bank is going to sell short to a shaky buyer. Banks will discount for cash.
I wanted to be clear about my earlier comment. Short sales were more common in the 1980s, and there were some in the 1990s, Of course they have been around a lot longer but my experience is limited to those two decades.
When this whole global melt down thing started I thought it was going to be great for me. I started doing short sales with buyer’s and sellers. After a few it became apparent that was getting to be a waste of my time. Approvals got longer.
As it turned out a bunch of idiot agents jumped in and mucked things up with the off the wall deals. Then the government started in with stimulus, and banks just didn’t need to care any more. Once the tax credit started, for get about buying property until that’s over.