Thursday, July 2, 2009

Getting Smart About Short Sales

Are home buyers getting smart about short sales in metro Phoenix? The tale of this particular home seems to indicate yes. Read on….

smart about shorts, EF

Cute home, no? Three bedroom, two bath, 1500 square feet. Nice neighborhood, good schools, newer homes. In winter 2005 it sold for $242,000.

This house was listed as a short sale for just over 7 months. In August 2008 the asking price started at $173,000. By February 2009 the price dropped to $119,000. It sat there for about 6 weeks, until the bank finally took the home back at foreclosure auction in mid-April 2009.

For 6 weeks nobody wanted the home for $119,000 if it was a short sale.

May 4, 2009: the home is listed as a bank-owned property. Asking price, $101,500.  The bank got so many offers they took it off the market on May 5. On May 8, the bank picked a winning bid. The winning bidder took possession on May 23, 2009.

Final sold price: $133,200. That’s 12% higher than the short sale asking price.

At least in this case, a buyer was willing to pay a 12% premium to take possession of a bank owned home right away rather than sit out the frustrating months-long wait for a short sale.

If you’re reading this and smugly thinking “That’s stupid! Pay 12% more? They shoulda bought it as a short sale,” then chances are you’ve never tried to buy a short sale. Read some of the posts in our Short Sale category and you’ll see why they’re rarely short and rarely sales.