Skip to main content

 

By: Jackie Beardsley


WHAT IS A SHORT SALE AND WHERE IS THE MARKET HEADING?



The term 'short sale' is used to describe a situation where there is more debt owed against a property than what it is worth. The borrower is upside down.


Naperville has shown a 3.4% increase in lender mediated transactions from 4-2022 through 4-2023.

When multiple offers were everywhere, and buyers paid above and beyond market value in order to get into their dream home

(at times many tens of thousands) they have put themselves in a possible short sale scenario when it comes time to sell.


A short sale is also referred to as a pre foreclosure.


Elements of a short sale:

  1. Property is worth less than owed.
  2. Seller has some hardship that makes it impossible to keep the property.
  3. Seller is cooperative and willing to work with a real estate broker to package the short sale.
  4. Lender is contacted and expresses willingness to entertain a short sale.
  5. Property is listed, with appropriate caveats and protections for the seller, properly priced, and effectively marketed.
  6. Lender is presented with offer(s), accepted by the seller, along with a completed short sale package.
  7. Lender approves the offer and escrow closes as usual. No proceeds go to the seller.
The difference between a traditional sale vs short sale is that the lender(s) must 'approve' the sale.  The bank will order a BPO (Broker Price Opinion) to determine market value.  Banks want to be in market range so hopes of getting a 'steal' isn't likely.


If the seller has filed for bankruptcy, it can be very difficult to complete a short sale.

The bankruptcy Trustee and Court will have to approve the seller entering into a listing agreement.


It is important that a seller obtain separate legal, credit and tax advice. The decisions the seller will be making all have legal, financial, tax and credit implications.


Possible Alternatives for Sellers:

  1. Keep the Property. The property may be rented then sell later in a better market.
  2. Sell the property and bring cash to close escrow from other liquid assets.
  3. Attempt a Workout with the Lender.
  4. Offer the Lender a 'Deed in Lieu of Foreclosure.'
  5. Consider Multigenerational Housing - bring in a family or friend who can help with payments.

In today's market, be patient, don't overpay for a property unless you understand that you will be bringing that cash or more to the table when it comes time to sell.


The market will stabilize and soften. Think of it as an auction, you may want what the other person is bidding for so you keep bidding higher but can have buyer's remorse once it's all said and done. More times than not when a real estate deal falls through, a better home will surface later on anyway.


WHERE IS THE MARKET HEADING?


Rental costs are accelerating at a rate of 8.8% annually yet various private sector apartment data show declines.

Construction of apartment units is at a 40-year high.

More vacant units, decelerating rents.


FIRST-TIME buyers made up just 27% of home sales in February 2023, down 31% in January 2023 and 29% in February 2022 since the National Association of Realtors began tracking the data.


The second quarter should bring lower rates, possibly back to 4% by the end of the year.


Short Sales Market Crash of 09' vs 2022


SHORT SALES & REO's DUPAGE COUNTY - CLOSED JAN -2009 THROUGH DEC 2009 2,139 UNITS CLOSED


SHORT SALES & REO's DUPAGE COUNTY - CLOSED DEC-2022 THROUGH JAN-2022 173 UNITS CLOSED



DUPAGE COUNTY ESTIMATED VALUES


DuPage County is showing a strong seller's market with 1.17 months of inventory - down 22.52% month over month.

Median days on market is 20 - Median Sales Price is up 6%.

For more in depth information or to have interactive market reports sent to you contact me here.





















Labels:

Popular posts from this blog

 By Jackie Beardsley WHAT JACKIE DOES TO GET HOMES SOLD! When Sellers had to move and the home was left vacant, this is how I helped them reach their goals in just a few days.  Above is my MLS photo of the kitchen which beautifully shows off their hard work. When I was asked to help out of state Sellers get their home sold quickly, it was a challenge well worth the hard work ahead.  First, I did a CMA for selling the property AS IS (picture below).
Read more
 By Jackie Beardsley BUYING A CONDOMINIUM?
Read more
 By Jackie Beardsley Staging your home for sale-is it necessary? There are many factors that go into making a decision about whether or not you need to stage your home.  Is it a buyers market or a sellers market?  What is your competition, the comparable properties in your area.  How much staging is necessary, if at all?  These are things that your agent will determine and help you make an informative decision. Not all agents are alike.  Some may believe strongly that it is going to be beneficial to stage your home and will show you the stats to back it up.  The stats are true BUT it can be misleading and the stats used may be irrelevant to your situation. Every home and the sellers situation are unique.  Staging DOES help but that doesn't mean you will have to hire a professional stager and pay thousands of dollars. If we are in a buyers market you will want to lead the market and not be chasing after it, that is how you will lose money.  Mo...
Read more