Distressed property in any form does not seem to indicate good news. But in the Boca Raton real estate market, the fact that short sales have overtaken foreclosures in number signals that homes in Boca Raton and its surrounding areas are moving into a housing recovery.
It is a sign of improvement when banks, such as Bank of America, announce that a Boca Raton short sale may now take fewer than 20 days if all paperwork is completed correctly and handed in. Some experts suggest that this may mean Boca Raton realtors as well as their counterparts in the banks are learning how to handle the necessary paperwork.
What it really means is that the banks are shortening the paperwork process and teaching their personnel to pay attention to each transaction, instead of simply passing paperwork up the line to another confused employee so that the process languishes and frustrates buyers, sellers.
Short Sale Time Will Decrease Across the Board
Taking a lesson from their publicly run counterparts, Fannie Mae and Freddie Mac, the government-run mortgage agencies suggest that they will decrease their short sale response time to 30 days or less as of June. Because these two agencies are responsible for almost 50% of our nation’s mortgages, this means most banks will follow in their footsteps and learn to make short sales into a shorter process.
Realty Trac, a website that tracks foreclosures, indicated that the trend of fewer foreclosures and more short sales is a country-wide phenomenon. This suggests that banks are selling more of their REO (real estate owned) properties to investors in bulk in order to get these properties off their books and out of the market.
Boca Raton Home Inventory is Down
In a housing market like Boca Raton, this insures that massive inventory does not flood the market and serves to keep home prices from falling even further. That may be why the inventory of homes for sale in the Boca market has dropped more than 35% from last year and why realtors are scrambling to find new homes for customers. (To find new homes in Boca Raton, go to:http://www.JablonTeam.com). In Broward County, inventory is down almost 50% from last year at this time.
The Benefits of Short Sales
Short sales, despite their name, customarily take a very long time. The “short” designation refers to sellers who are short of cash to pay their mortgages. Short sales allow sellers to avoid foreclosures. They are a win-win-win situation. Because 1) they put houses into the market at about 15-20% under market value; 2) they help banks to avoid the high legal fees involved in foreclosure; and 3) while they damage a seller’s credit rating, that damage lasts only 2 years, as opposed to the 10 years of credit pain that follows a foreclosure.
Many banks encourage short sales, rather than foreclosures and even offer sellers money to move out this way, rather than chance a foreclosure. It may seem paradoxical that a bank that is losing money on a sale of a Boca Raton home is willing to pay out even more money to remove that home seller.
However, when contrasted with the legal costs of foreclosure, along with costs to repair damage that typically results to a Boca Raton house that is left empty for the two or three years that a foreclosure process may take, the exit payment to the short sale seller is relatively small.