Miami-Dade: Distressed Property Sales Outpace Non-Distressed Sales | Real Estate News – August, 2010

In bank-owned properties, Buyers, closing, credit, Distressed Sales, fannie mae, FAR, FHA, First-Time Buyer, florida, Florida Legislature, forclosure, foreclosure, foreclosure prevention scam, government, home sellers, HomePath, HUD, Industry trends, Kiyosaki, lenders, Market Report, miami, miami beach, modification, mortgage, NAR, real estate, REO, Sellers, Short Sales, Trends on August 13, 2010 at 5:11 pm

County Sales and Statistics

Year over Year, inventory of all for sale properties between July, 2010 and July, 2009, saw an overall drop of 14.6% from 28,059 units in 7/09 to 23,976 in 7/10.

Sold properties also saw a drop from 1,870 in 7/09 to 1,698 in 7/10, or a 9.2% drop in closed transactions, while Pending Sales (properties under contract), saw a surge of 16.1% from 2,635 in 7/09 to 3,058 in 7/10.

The bleakest sector can be seen, when one looks at Non-Distressed sales activity and compares it to sales of Short Sales (pre-foreclosures being sold for less than what’s owed), and REO sales (properties already repossessed or Real Estate Owned).

There was a drop in the inventory levels of non-distressed properties for sale of 28.9%, while closed sales in this category also saw a drop of 29% and pending sales dropped by 41.3%. The drop in inventory may be due to an increase in short sales, REO or sellers dropping out of the race, still unwilling to compete at today’s prices.

This is a clear indication that buyers (those who dictate where “the market” goes), continue to control this market and favor distressed sales and non-distressed properties, priced aggressively.

Some buyers may also be swayed away from pursuing distressed sales due to the time it takes to close (especially short sales), or the heavy competition and mostly cash buying requirements for pursuing REOs.

Non-Distressed sales often offer a ‘regular sale’ transaction feel without the stressors associated with the others, helping those in this market segment who are ready to make an aggressive deal.

In our segments below, it seems clear that the market segment exhibiting the most activity due to increased demand, is by far the distressed property segment. Short Sale property owners don’t normally care if the buyer requires financing or not (except in the condo market), and REOs are quite aggressively priced, making them very attractive.

REO Volume Sold

REO Activity

REO properties for sale were up 92.3% to 2,111 in July, 2010 signaling that lenders are taking back more inventory and finally assigning them to asset managers and Realtors to sell.

For a number of reasons, closed REO sales saw a 23.5% drop in transactions from 872 in 7/09 to 667 in 7/10.
This could be in great part because of lenders favoring cash offers over financed deals (which mostly affects properties needing a lot of work and condo units).

As cash buyers dry up and non-cash buyers (mostly FHA buyers and those seeking the now gone tax credit), retreat, sales in this segment will continue to be slow.

Also, lenders are unlikely to allow a buyer come in with a construction loan to buy a rehab property (such as with FHA’s 203k loan program). These specialized loans take longer to close and lenders shy away from accepting these offers.

They also shy away from accepting any type of financed offer for condo units because so many condominiums now do not meet Fannie, Freddie or FHA standards, that it is not possible to lend in a great many of them.

This makes attempting to buy an REO condo unit with financing, futile, leaving this segment of the available inventory almost strictly in the hands of cash investors to fight over. If they are not buying in bulk, then they must compete for these with higher bids.

Obviously, there is still a lot of interest in this segment as evidenced by the increase of 36.5% in pending REO transactions to 1,151 in 7/10 (from 843 in 7/09). Aggressive pricing is typically the reason interest continues to be high in spite of slower sales.

Lenders are not in the real estate business, they are in the lending business. They don’t care about roofs or toilets, except when used as a criteria for lending against a property (asset). You’d think they’d help facilitate these property sales. Instead, they are getting bit with additional city and/or condo fees and fines, while condo associations get tough on placing liens against their properties and demanding full payment of fees in arrears – all of which is slowing sales. Ask me how I know.

Short Sales’ Specifics

Short Sale Activity

It is imperative that you select trained professionals to help you avoid foreclosure. The damaging effects of doing nothing could cost you thousands in higher interest rates for all your credit needs for many years. In addition, the stigma of foreclosure plays a roll in credit issuing and perhaps even employment opportunities.

Lenders evaluate a candidate based on credit score, ability to repay and character. A foreclosure is likely to negatively impress your lender, be it for a car or even a cell phone and it is especially damaging if you ever decide to buy real estate again.

You see, there is that little question in the mortgage loan application where they ask if you’ve ever had a property taken back in foreclosure. Answering anything other than the truth, could potentially land you in jail for fraud.

In addition, some employers may not hire you or consider you for promotion. In the military and other high security clearance jobs – it may be cause for disciplinary action or loss of employment.

7 out of 10 people loose their home to foreclosure because they make no attempt to get help. Don’t let fear or shame stop you from getting help.

A short sale is when the lender accepts less than what they are owed and releases the lien against the property, allowing it to be sold at today’s price. It may be a solution for someone who is unable to make arrangements to pay back the lender for skipped payments and whose income situation disqualifies them for bankruptcy and/or a loan modification.

Many sellers even find this a more dignified way to end this situation. They often feel that they are in control and helping themselves limit the damage to their credit, while improving their chances of being able to buy again in two or three years when their circumstances get better.

In fact, the distressed property sector showing the most dramatic change in sales activity by far is the Short Sale sector where there was a 6.2% increase in inventory levels from 7,634 in 7/09 to 8,104 in 7/10. A much lower rate of increase than for the previously discussed sectors.

Additionally, this segment showed an amazing increase in closed Short Sale transactions of 415 in 7/10. Seemingly small but, in sharp contrast with the 131 Short Sales closed in July 2009 (or a 216.8% improvement year-over-year!), while Pending Short Sales also sharply increased 107.5% from 575 in 7/09 to 1,193 in 7/10.

Therefore, there is no reason why your property could not also be sold or under contract today, helping you avoid foreclosure. Others have…you can too.
Make your move…take control and contact a professional Realtor who specializes in this field right now.

  1. […] Miami-Dade: Distressed property sales outpace non-distressed sales […]

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