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Short sales: Next big thing?
10 day response possible from some banks
This short sale at 1970 Pin Oak with 1,773 square feet with four bedrooms and three bathrooms is available for $179,900. - photo by DENNIS WYATT
Short sales were avoided like the plague just a year ago.

Buyers and sellers alike were frustrated due to foot-dragging by banks. Often times an offer would be accepted months after it was made only to have the property appraise for less than the offer due to the rapidly changing market causing the deal to fall through.

Now some Realtors are predicting short sales are the “next big thing.”

The reasons include:

•More banks today are motivated to make short sales work to avoid going to foreclosure that can cost them even more money.

•Buyers who have been looking at foreclosures and getting frustrated with the condition that many such homes are in realize that the short sales may end up costing a bit more but the homes usually are in much better shape, the  landscaping isn’t dead and they can find out up front what known issues there are with a home. That’s something they can’t do with a foreclosure.

•Sellers can get out from under a mortgage they can no longer handle without suffering the credit score bruising that a foreclosure gives a borrower.
“Banks are beginning to understand that they will end up losing a lot more money if they go to foreclosure,” pointed out Anna Anguiano of Century 21 &M Associates Real Estate.

Century 21 is representing one particular bank that has a number of short sales in Manteca and the immediate area that has stepped up and has established set prices for agents representing the properties to deal with and has put in place procedures that allow a response to a short sale offer within 10 days. It is a far cry from what used to take weeks and often months – if ever - to get a response from a bank struggling to deal with foreclosures and distressed property.

Short sales also offer a viable alternative to foreclosures. They are usually in much better condition which means less work needs to be done. Also, there is less bidding taking place although investors also are mining the short sale lists for gems.

They also aren’t sold “as is”. The seller has to disclose known issues. Sellers may also be willing to do relatively minor things including things to make deals work.

Century 21 M&M Associates is aggressively seeking out people who are caught in situations where they are under distress and want to sell because they can no longer handle payments.  They are meeting with owners of such homes to go over options. Smith noted that unless Congress extends the exemption, the difference between what the bank is owed and what a short sale homes sells for will be taxable income again in 2010.

Chicoine noted a short sale that goes through is not as brutal on credit scores as a foreclosure. All that will show up on the credit report are late mortgage payments not the actual short sale. If the home goes into foreclosure, it shows up on all credit reports. She said a short sale can allow a seller to get in a position to buy a home again usually after two years while a buyer with a foreclosure on their record has a much longer wait.

“You could (someone selling a short sale) could be in a position to take advantage of the lower prices within a couple of years of selling,” Chicoine said.

The important thing to remember with short sales is that patience required. Each of three agents, though, can cite cases where they’ve had a quick acceptance of an offer- as soon as six days – and have had escrows close within a month or two of after making an offer.

“This is a great market,” Realtor Connie Chicoine said. “There are people making $12 an hour who can qualify to buy a home in Manteca.”