Neal Weichel's BlogFriday, 02/17/2012 12:00 AM
SHORT SALES...Why the Market Won't Go Up Soon
I have spoken to a lot of potential sellers in the last 6 months that
think that 2012 might be the year for them to sell. In almost all cases they think that the market will be better than last year. It is understandable to hope for that; the news these days for Real Estate is far more positive than it has been for the last 4 years (foreclosures at lowest numbers since the crisis, low interest rates for the next few years, affordability of Real Estate and buyer confidence the best it has been in a decade). I mean, why wouldn't prices stabilize or go up?? The answer as to why they won't, or maybe I should say "can't" lies in the competitive listing that keeps the market from appreciating - the short sale. Because I spend so much time on short sales, I can forget that the public often doesn't understand how they work and why they keep prices from rising. To review, a short sale is where the seller owes more than the home is worth and they are getting NO MONEY when it closes. Consequently many sellers really don't care at what price the property ultimately sells. In fairness, this isn't always the case. The highest sale in Stevenson Ranch last year was a short sale that I sold for $910,000. The bank was willing to take $750,000, and actually suggested that I reduce the price, even though I had interest at the $900,000 price point. The seller also wanted to maintain the "comps" and agreed with my strategy. Remember, the owner is still the seller, not the bank. The bank approves the price but is not the actual seller. In this case the banks computerized, "Zillow" valuation gave them a reduced sense of value, not factoring in views, upgrades, and desirability of that particular neighborhood. Again, they don't own the home or really know the market trends, so the value that they will ultimately approve is often off a bit.