November 2011 statistics show that short sales sell for significantly more than REO's (Bank Owned Properties) but less than non-distressed properties. Banks are still taking many months, sometimes years to close a short sale so buyer's must take additional costs and risks of waiting so long for a closing into consideration. Such costs include rent and advanced inspections. Risks include the increasing difficulty of obtaining a mortgage. Many experts predict a banking collapse of some type and money is becoming tighter by the day so if it takes 8 months to close a short sale, one has to consider that money may not be readily available as we enter 2012.
Look at the Florida trends. A short sale with all of it's risks and hassles sell for only slightly more than a "move-in" ready REO. The difference is that many short sales are homes that people have not maintained because they are about ready to lose them to foreclosure so they are saving for their next move and/or they simply don't want to put money into a home that will eventually go back to the bank. For this reason, many short sales are not move-in ready but need significant work and might better be compared to a damaged REO.
It looks like the best deals are still with bank owned inventory. REO's are generally quick closings and you can still make good profits by rehabbing damaged REO's or you can move right in for slightly less than months of playing around with a short sale deal with a 20-25% chance of closing.
Our advise is to not fall into the "short sale" frenzy. Look at the "deal" not the buzz words. For our money, we say BUY LOW. Prices are still falling and the most important factor is to predict values 6 months from now and make sure that you are not overpaying on a property. Short sales may be a good option but make sure that you are not paying too much for the time and hassle it takes to close them. Unfortunately, the offer that a bank accepts on a short sale may be more than it's worth or just market value when you finally close it. Choose an agent that is not looking to "close a deal" but is looking to "get YOU a deal".
Housing Trends Update November 2011
Average Property Price by Region--Year to Date | ||||
Region | Damaged REO | Move-In Ready REO | Short Sale | Non- Distressed |
AZ & NV | $103,693 | $172,628 | $173,993 | $251,113 |
California | $197,053 | $260,878 | $304,766 | $445,829 |
Farmbelt | $69,070 | $136,186 | $164,191 | $200,746 |
Florida | $85,503 | $150,253 | $152,788 | $247,082 |
Industrial Midwest | $61,767 | $110,342 | $140,630 | $203,928 |
Northeast | $145,983 | $290,599 | $232,255 | $333,874 |
Oil Producing | $68,044 | $154,227 | $158,555 | $206,919 |
Pacific NW | $102,588 | $236,322 | $263,515 | $331,808 |
Rocky Mountain | $152,910 | $177,458 | $194,710 | $245,737 |
South | $82,588 | $155,118 | $192,645 | $222,340 |
National Average | $100,263 | $179,581 | $201,076 | $260,515 |
