The Chances A Short Sale Will Actually Sell
May 5, 2008 | By Kelley Koehler | Filed Under Home Buying, Home Selling
I’ve got a buyer thinking about making an offer on a short sale property.
Remember, a short sale is where the owner owes more on the house than they can sell it for. They’re most often incredibly long, frustrating sales, and often, the sales never actually complete. You have to get the lender to agree to take less than what is owed, and, well, I don’t want to go into a huge short sale discussion now, but know that they’re often ugly transactions.
On the plus side, if the listing agent deals often with short sales, knows that they’re doing, then you’ve got a better chance of actually purchasing a short sale home. That’s a better chance, but still no guarantee.
Today, there are 665 single family homes in the Greater Tucson area marked as a short sales in the Tucson MLS. In the last 6 months, 139 disclosed short sales have actually sold.
Which makes the chances of a short sale closing roughly one in five.
Last time I ran that calculation back in March, it was one in ten.
Progress?
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# Short Sale Homes on the Market today: 1820
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That’s a 12.7 month supply of short sales in Tucson. Which means about 1 of every 13 short sales actually sell.
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Landed in my inbox today, a proposed rule change, if I understand the message correctly:
MLS Rule Change for Short Sales
Section 3.18- Short Sales:
As used in these rules, short sales are defined as a transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; [...] - New Rule about Short Sale Disclosures in the Tucson MLS (June 28, 2009)
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After reviewing changes implemented by the National Association of REALTORS®, the MLS Board has implemented the following Short Sale rule, effective immediately.
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HI Kelly,
We should look at the ratios for the homes that went under offer that sold because that is the true indicator of how many actually closed.
Hi Anne! Very true. If we had better access to the MLS database, we could be much more exact. As it is, I can’t determine how many went contingent and didn’t close without manually checking hundreds of listings. And even then, I don’t know if it fell out because of inspections, a buyer failing to qualify, or the bank not coming to terms with the seller. I would call this a rough estimate.
I just got done writing a white paper and article Series on the Short Sale Fake Listing Fiasco. (I’ve linked to it above).
I believe the numbers may actually be lower than you’ve listed here. How do closed sale numbers compare to non-distressed sales, and how much lower than the non-distressed sales are these properties listed at?
In Sacramento County, 39% of active inventory are short sales, compared to 34% for non-distressed sales. Also, compared to non-distressed sales, short sale properties that did sell were discounted an average of 24% (about $81,000) from non-distressed sales. Yet of everything that closed in the last 30 days, 22% were non-distressed compared to only 8% for short sales. So even though short sales are discounted 24%, non-distressed sales outsell them more than 2 to 1.
So in my opinion, you can’t just look at how many actually close — you also have to keep in mind how many offers are actually written. I’m sure that lots and lots of buyers are out there failing on these.