A million short sales in 2013? I doubt it and here’s why.

By
Real Estate Agent with Better Homes and Gardens Real Estate Metro Brokers

A million short sales in 2013? I doubt it and here’s why.Some prognosticators have predicted that the number of short sales completed in 2013 will double the mark set last year and approach one million for the calendar year.

Full disclosure: I am NOT an economist. I am NOT a statistician. My rebuttal is not predicated on anything more substantial than common sense.

But here are my reasons that we will not see a million short sales this year:

First and foremost, the system can’t handle the volume. There isn’t enough infrastructure in place to successfully complete that number of transactions.

Second, most of the pre-2006 investors are already out of the game. We are seeing less of these kinds of “bulk” short sales these days.

Third, many properties are getting closer to the “treading-water” mark and the sellers are less likely to succumb to the rigors of short-sale scrutiny, and will opt to test the market in hopes of a non-distress sale.

And finally, and this is the one where common-sense applies the most, many of the over-appraised, high interest rate loans have already been converted to lower principle, lower interest loans either by attrition or modification. Five years is a long time in a world where the average seller has owned their home for about seven years anyway.

I could be oversimplifying the situation. Perhaps I am missing something obvious.

Only time will tell!

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Rainmaker
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Roger Stensland
Keller Williams Realty Puget Sound - Enumclaw, WA
King & Pierce County Homes Home Resource Group -

I think and hope you are correct.  We may disagree on my next opinion.  It is my belief that in the majority of the cases, short sales are a larger benefit to the Realtor®/agent than for the homeowner.  While a foreclosure hits the credit harder that a short sale, both can usually purchase a new home in 3 years.  If you can still afford the payments and you don't have to move, don't sell short.  Especially, with the market coming back.  Also, merely because your house may be worth a lot less than when you purchased it, you still signed a contract.  These contracts should be honored.  You don't stop paying for your car just because it lost a lot of value when you drove it off the lot.  But, then, that's just my opinion - I could be wrong.

Feb 28, 2013 06:07 AM #1
Rainer
370,062
Tish Lloyd
BlueCoast Realty Corporation - Wilmington, NC
Broker - Wilmington NC and Surrounding Beaches

If our market is any indicator, the short sale market will be dramatically reduced this year.  We've got a fair number of foreclosures, but they're selling at a good pace and for strong numbers.  The short sales are few and far between right now. 

Feb 28, 2013 06:11 AM #2
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Richard Weisser
Better Homes and Gardens Real Estate Metro Brokers - Newnan, GA
Richard Weisser Coweta Newnan Homes for Sale

Roger...

I don't disagree at all. Thank you for a very honest and thoughtful comment.

Tish...

We are seeing the same thing here. Thanks so much.

Feb 28, 2013 07:02 AM #3
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Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I agree with you 100% Richard,

in our market, properly values are way up and there is a sense of a quick value recovery  in our whole community

Feb 28, 2013 07:55 AM #4
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Richard- I haven't a clue but I do agree with you that the system has not and cannot handle that kind of volume. 

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Feb 28, 2013 08:00 AM #5
Rainer
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Steven Cook
No Longer Processing Mortgages. - Tacoma, WA
- Pierce, King, Kitsap, Thurston, Mason Counties

Richard -- from what I am reading, I would have to agree with you, primarily because there are so many areas where values are coming back enought as to circumvent the short sale process.  The seller may not get much, but they should be able to come out even in many areas, which lowers the numbers left to do short sales.

Feb 28, 2013 10:37 AM #6
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Anna Banana Kruchten
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana of Real Estate!

Richard short sales are down considerably in the Phoenix area - and we were one of the hardest hit markets which had a ton of shorts for the last 4 years.  Values have risen close to or above 24% in many areas and price points this past year which gives a lot of sellers some light at the end of the tunnel in terms of hanging onto their home and recovering within a few more years or so. Add on  to those facts, fannie mae is declining short sales, letting them foreclose and putting back on the market at an inflated price of 20 to 30% over current market value with no appraisal needed as it's homepath financing.  Who is saying over a million short sales in 2013?  It doesn't make much sense to me at this point.

Feb 28, 2013 11:42 AM #7
Rainmaker
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William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.

Richard...Values are also climbing, albeit slow, they are going up.  I sat with a couple the opther day who were thinking short sale and they found that they may have to much value to even consider a short sale.  (Also, they were not behind on payments nor had they any job losses.)  They thought about doing this because EVERYONE else is doing it!

Feb 28, 2013 01:04 PM #8
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Tammy Lankford
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Your Lake Sinclair Expert (706-485-9668)

our area never had a huge % of them.  Now if we can get throught he flood of foreclosures in our market, we can get back to the business of real estate.  And the fact that I thought and still think they will come to an end is exactly why even though I learned them, I did not put all my eggs in that basket or market myself as a short sale "specialist"

Feb 28, 2013 01:49 PM #9
Rainmaker
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Nancy Conner
Managing Broker - City Realty Inc - Olympia, WA
Olympia/Thurston County WA
I think you're right - we're seeing declining numbers of short sales in our market, with low inventory starting to nudge prices up a little bit. The other thing I've realized is that when anyone talks about the number of properties that are "under water" as being part of potential short sale numbers, that ignores the fact that many under water homeowners are doing OK making their payments and have no need to sell at this time. And still others have the ability to make up the difference in amount owed and amount they can sell for, so do not need to do a short sale either.
Feb 28, 2013 03:08 PM #10
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Brenda Mullen
RE/MAX Access - Schertz, TX
Your San Antonio TX Real Estate Agent!!

I would have to agree with you Richard.  I don't see short sales going up that much.  The market is improving a bit and those who would have had to do a short sale before are now able to get by selling with no money out of pocket. The short sale process across the board has seemed to get a bit better, but a million is a bit much.  

Feb 28, 2013 06:10 PM #11
Rainmaker
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Kathy Sheehan
Movement Mortgage 770-634-4021 - Atlanta, GA
Branch Manager

Richard, I don't see the number of short sales doubling... in fact the last three contract I received are seller owned, not REO properties.

Feb 28, 2013 07:02 PM #12
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Bryan Robertson
Catarra Real Estate, Inc - Los Altos, CA
Broker, Author, Speaker

With property values rising in many of the hardest hit markets, I doubt sort sales will be much of an issue in 2013.  Even in some of the hardest hit areas of California, values are coming back.  I think the economists making these predictions are just guessing based on a few stats and not reflecting the rapidly recovering market.

 

Mar 02, 2013 08:02 AM #13
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