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Short Sales Up or Down? Yes. Maybe. Or something.
Somebody once said, “There are lies, damn lies and there are statistics.” Basically, what this means is that anyone can take any statistic and use it for their own agenda. A good case in point is the new GSE practice of demanding 100%+ of BPO value on short sales in some markets because of media reports of rising home prices. This is risky, because temporary or minute price index increases do not spell out a stable price recovery. Moreover, the GSE purchase programs for these overvalued properties such as HOMEPATH, which allow buyers to buy GSE held property with no valuation requirement are basically a return to the old “Finance anything” mentality that got us in trouble in the first place. Some examples of recent statistics are:
“RealtyTrac shows a 33 percent year-over-year increase in pre-foreclosure sales (typically short sales) in January 2012, with annual increases in 32 states, including Georgia (113 percent increase), Michigan (90 percent increase), California (52 percent increase), Texas (48 percent increase), Arizona (44 percent increase), Nevada (36 percent increase), and Florida (20 percent increase).
Short sales outnumbered bank-owned REO sales in 12 states, including Utah, California, Arizona, Florida, Indiana, Colorado, New York and New Jersey. The full report provides detailed January pre-foreclosure sales data at the state and metro level, along with national pre-foreclosure sales data broken down by lender.”
These statistics are completely opposite of these market statistic compiled by Core-Logic:
“November 2012 Home Price Index Report:
Home prices nationwide, including distressed sales, increased on a year-over-year basis by 7.4 percent in November 2012 compared to November 2011. This change represents the biggest increase since May 2006 and the ninth consecutive increase in home prices nationally on a year-over-year basis. On a month-over-month basis, including distressed sales, home prices increased by 0.3 percent in November 2012 compared to October 2012. The HPI analysis shows that all but six states are experiencing year-over-year price gains.”
And this report, again, by RealtyTrac
“Short sales have long held great promise as a market-based solution to the nation’s foreclosure problem, but short sales transactions over the past three years have actually declined after peaking in the first quarter of 2009,” said Daren Blomquist, Vice President at RealtyTrac and author of the report. “January foreclosure sales numbers, along with first quarter foreclosure activity, strongly indicate that downward trend is ending, and we believe 2012 could be a record year for short sales.”
Hmm…Two organizations who’s agendas are not clear, and who enjoy lucrative relations with the nations lenders and GSE’s, are posting diametrically opposed information on the same subject. Talk about doublespeak. But why? Well, look at their masters: The lenders and GSE’s. Short sales are, undeniably, a huge part of the business today, but these lenders main source of income in the mortgage market is loan originations. If they can appease the short sale markets by putting out statistics that show how “streamlined” and prevalent short sales are, they look good. They then turn the cheek and put out statistics showing how the market is rising, then roll out questionable loan products to stimulate loan orgination in the very market they created. Get a mortgage loan on a distressed property that we took a huge loss on…with no appraisal? Sure, sign right here…
What we all need to do is not be influenced by this “news” and focus on what is important – Helping sellers one at a time and working with lenders to get short sales approved. You will need to be armed with local, detailed comps and market data to support your offers now more than ever, so you are prepared when the lender counters at or above FMV. Value disputing is an art, and it will be ever so important in 2013. Please contact Joseph Alfe or visit www.josephalfe.com or www.ssprocessors.com for more information.