Think Short Sales Are Only in the Subprime Market? Think Again!

Attached is a link to a Florida Association of Realtors article pointing out the changes in the market place that are now affecting the half million dollar plus and even million dollar place home market.

For us, our experience is that, like the article said a large group of these short sale homes ARE located in the sub $200K and now even sub 150K range and WERE limited to the sub prime market but we had already been seeing plenty of Shorts 500K plus and even 1 million plus as far back as this time last year.  We believe that this (Sarasota Bradenton) market was a "leader" if you will, into the downturn - having had a market stall in September of 2005 and then at first a slow erosion of price which has turned in the last 14 months or so into a pretty rapid decline in price. And while the higher end SEEMED to react a little later - we saw that end of the market come down long before the folks nationally in the markets quoted have seen them.

Perhaps too, these took longer to go short as folks on the upper end of the market had more resources to exhaust and were willing to do so to try to avoid the stigma of either a short sale or a foreclosure. We have also seen banks be a lot more agressive in asking for some "owner contribution" on the higher end as they see this type of  customer as having a better income stream to tap into or they would ask them to liquidate 401K type assets (that usually can't be harmed in a Bankruptcy but the bank is assuming the customer wants to avoid that route as well) or even that the customer has a better income stream and can afford to take back a note after the lien is released.

But as the market continues to weaken AND folks have had their 401K's and their portfolios depleted they have less resources to tap on AND are less willing to exhaust what they have left to keep a mortgage that is far bigger than the current value of the home current.

Once again, this is not the answer for everyone but if you find yourself in this position and need to understand your options you should speak with someone who has done a number of successful short sales before you get too far behind on your payments.

http://www.floridarealtors.org/NewsAndEvents/n1-111708.cfm

- Mike W.

AP Article on Foreclosures Gets Me Thinking...

Below is a link to an AP Newswire article saying that foreclosure rates are up 25% year over year for October of 2008 back to October of 2007.  As folks who read this blog know, in a way our real estate practice has benfitted from the spate of short sales and foreclosures but the last two years have been a real eye opener for us as well - on  a lot of levels.

My heart goes out to folks who truly have financial misfortune and find themselves upside down and unable to stay in a home they thought they could afford but that is only one piece of this group of underwater properties.

More and more I am going into homes that were built by speculators and investors, they never lived in the home and they did 100% financing on the home - and now they cannot sell them for the outstanding loan balance and they end up in foreclosure. And here I'll use a specific to describe a general, never a good thing, but we have one where someone, AFTER they tried to sell the home themselves and before the home ends up in the property of the bank, literally REMOVED the KITCHEN from the building. Went in with a sawzall, cut the plumbing back to the wall, took every cabinet, appliance, counter, EVERYTHING. Now I can't say for sure WHO did this but the home shows no sign of forced entry. IF the previous owner did it, exactly how does one square the idea that although the bank financed EVERY dime of the home, if it's headed to foreclosure and the bank is going to lose 100's of thousands ANYWAY, then this person can in good conscience take a 50 to 60 thousand dollar kitchen with them as well??

We see it all the time, people are mad at the bank and destroy the home as they are leaving. SOOOO they leave all their NEIGHBORS with an eyesore that cannot be sold and when it does it severely depreciates values all around them and somehow they "punish" the "Bad Ol Bank" for loaning them money they probably shouldn't have borrowed to begin with!  I guess I don't understand that logic at all.

I am no advocate for banks who made loans to people who had no business borrowing more than they can afford but conversely I feel if the bank financed the home, all of it, then if you give it back to them you should give it back, INTACT.

What do you think?

http://www.floridarealtors.org/NewsAndEvents/n2-111308.cfm

- Mike W.