Los Angeles Short Sales Flooding the Market in late November 2009
by Ben Nicolas
on Thursday, November 26th, 2009 at 8:08am.
Los Angeles Short Sale Market Report
As of 11/26/09 there are over 1,000 short sales being sold publicly via the SoCAL MLS/CARETS IDX data feed in Active status in the city of Los Angeles alone, 1,015 to be exact (this does not include anything listed in Los Angeles County). 790 of the 1,015 are listed below the Fannie Mae traditional conforming loan amount of $417,000 and 945 of the 1,015 are below the new super conforming loan amount limit of $729,000. Of these 1,015 listings 310 are priced below $200,000. Only 25 of the properties are listed at $1 million+ price range. My takeaway: Short Sales are typically much better suited for the first time FHA approved home buyer than REO's because
Most of them fall within a listing price range that there are still an abundance of lenders with mortgage programs for.
Most short sales are in better condition than REO's because they are still being occupied by their owners. When owners are still living in their homes and are given the opportunity to conduct a short sale and leave on their own terms they are less likely to trash the place on the way out. Plus, occupied property is less suseptible to vandalism
Relatively speaking, when buying distressed property buyers get more of the protections of a standard transaction then they do when purchasing an REO. As any agent that has sold REO properties can tell you the transaction offers very little protection to the buyer, the banks have no obligation to disclose anything and have somehow found a way to legally avoid having to sign a majority of the standard disclosures a seller in the state of California would have to produce. Most to all REO lenders have mandatory 1/2 inch thick addendums they require buyers to sign taking away as much of the buyers rights as they can legally get away with and then some they can't but they throw them in there anyway just to mentally intimidate the unknowing, unsophisticated average American home buying consumer.
Alot of agents and homebuyers want to "stay away from short sales" because they think the process takes too long and there is no guraunteed results...uummmmmm tried buying an REO lately? Due to government pressure on banks and loan servicers to slow down the foreclosure statistics there is a major shortage of REO inventory. Any decent piece of property that hits the market in Los Angeles County gets inundated with mulitple offers 10-20% of those offers are typically all cash. Many REO agents won't even consider FHA offers and the ones that do often prefer to take cash offers or conventional offers with large downpayments. FHA approved home buyers that want to take advantage of low prices, lower interest rates and the Government Tax Credit had better be prepared to consider all options (which means looking at short sales) if they want to seriously have any chance in haites of getting an offer accepted.
The most expensive short sale listing is 1446 Donhill Rd in Beverly Hills at $7,200,000. Not sure why its a short sale as public records has last sale price as $3.8 mill, with a refi for $4.3 in 2007 and a construction loan for $1.5 in 2008 which still only totals $5.8 (NDC data)