Short Sale and Foreclosure Values?

When looking at property, do you feel that the foreclosures and short sales offer the best values?  Check out my blog on some REO Princeville values and let me know what you think.  Susanna Kunkel

  • January 22 2009 - Princeville
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Answers (6)

Profile picture for Josh Painter
Yep.
  • January 22 2009
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Hi Susanna,

I do agree that bank owned homes in Burbank and short sale home in Burbank offer home-buyers an excellent opportunity to purchase a home which was in most cases valued at twice it's current value just a few short years ago. 
  • January 23 2009
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Aloha, Susanna... great to see you on Zillow! :)

It's my current belief that the best values are to be found with motivated sellers that still have equity in their property. That being said, my personal experience is that while short sales probably offer the best price opportunity, most of them take so ridiculously long (and only about 5% actually close, which is a crazy statistic) that at some point the Buyer and their Rep start to question the dollar per hour value of trying to work with the lenders for hundreds of hours to make a deal happen... and then on top of it, we're being strangled as professionals by Act 137 if the short sale becomes a "Distressed Property" (admittedly, this process is worse for the listing agent and seller). Bank-owned property (REOs) at least offer the opportunity to buy and close on a property in a "normal" amount of time, and I've found that it's still possible to negotiate price with the bank - at least a small amount (better than nothing!). I think this distinction will become infinitely more important when interest rates start to climb back up again, because what buyer is going to want to wait six months for an answer to a short sale offer when rising interest rates make their offer more expensive by the day? (Except cash buyers, of course.) Just my 2 cents!!

Happy Aloha Friday!
Katie


  • January 23 2009
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Hi Katie,
Thanks for you input!  We do have additional problems with Short Sales in Hawaii due to Act 137.  In fact, some of the recent closed sales could potentially be challenged in court if the listing agent was acting as a "Distressed Property Consultant".  As a Buyers Agent, I have to warn my clients that if it becomes clear the listing agent is violating this Act, we (or at least I) will have to back out.  Although the deal may close, it's not necessarily legal under Act 137.  Someone can challenge it.  And at the end of the day - the reduced values are only about 80% of market - and we can often negotiate better than that with the right motivated seller.

With our foreclosure rates tripling, obviously the intent of the Act 137 to protect homeowners facing foreclosure is not working.  Most distressed homeowners don't know about Short Sales, and we're legally restricted from advising them.

Our market is truly an adventure and my buying clients sometimes feel like they've just gone down the rabbit hole in Alice in Wonderland.  For helpful buyer updates and educational videos - check out my Buyers Agent webpage or subscribe to YouTube/Susie4Kauai.

Susanna

  • January 24 2009
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Profile picture for lucho975

The real opportunity is with Shortsales! You can get a better value.  Banks dont really want to foreclose and rather acept a reasonable offer.

  • January 24 2009
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I always appreciate an agent who takes care of the consumer first. If coming into an area and two identical types of houses are for sale, one an REO and the other a short sale, in California, the short sale appears to me to be best for the buyer.  Why?  The short sale seller has to provide the buyer a TDS and disclose defects known about the property... whereas the foreclosing lender is exempt and has limited liability.

How much is that worth?  I think alot.  I would easily pay 20k more to know the truth and defects about a house than self insure for the risk.
  • January 25 2009
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