Wednesday, February 10, 2010
Short Sales are on the rise, but will the industry be ready to handle the volume?
From 2007-2009 the realestate and banking industries experienced a staggering number of foreclosures there was so much volume that it became an investors haven. Bank owned or REO properties ofter sold for more than twice the market value and investors continbued to bid up the prices on these homes. This made true first time home buyers very frustrated becuase they often could not compete with the banks request for the highest and best offers like the investor.
Now in 2010 the industry is about to become flooded with a hugh number of Short Sales, simply becuase the Obama adminstration called for banks to allow up to 6 months of default payments before foreclosure proceeding could begin, and in addition banks were mandated to help with mortgage modifications. Sometimes the trial modification payments were much higher than the exisiting mortgage payment than the homeowner is in default on.
All these measures have caused a delay in the inevitable increase of defaulted loans and the increased stress on homeowners who received bad loans to begin with. But will the realestate industry be ready for the increased volume, hopeful buyers and long waiting periods? Right now the average wait is about 6 months but with increased volumes this may increase to more than 12 months waiting time before a buyer realizes his purchase.
There is one bright spot in the light of this tunnel. Wachovia Bank is rising as a leader with a plan. Wachovia has streamlined the Short Sale process with 7 day approvals in most cases which means the buyer can complete his/her transaction within 2weeks-30 days depending on their purchase method when givien the seller at least 1% of the sales price or $2500. This is very encouraging for both buyers and sellers.