Short sales make up more and more of the listings. In San Diego, we have almost 20,000 homes on the MLS, and over 4400 are short sales.
But each month, less than 200 sell.
In fact, only 0.6% of short sale listings sell each month!
We have 2000 REOs for sale, and 25% of them sell each month.
This is what is happening: servicers do NOT like to do workouts or loan mods for borrowers, nor approve short sales. They are limited by what is called the "Pooling and Servicing Agreement" to only modify up to 5% of the pool, and to only do modifications that do not violate the investor's REMIC tax treatment (whatever that is).
So if you make an offer on a short sale, be prepared to wait 2 - 4 months for an answer from the lender, and be prepared that most of the time, the answer is "no".
Best, wait for the property to become an REO. Track it on ForeclosureRadar.com. The REO is priced very low, less than vacant properties even. Banks want to get rid of their REOs.
Comments:
Hi Scharhzad,
Yes shortsales are very difficult territory for investors - hard to buy at a reasonable discount when you need approval from the owner and typically 2 lenders (1st and 2nd). We definitely hear that investors are having much better luck with REO's at the moment.
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