Posted on Thursday, March 08, 2012
For many Naples real estate realtors (and buyers and sellers) short sales may remain untested waters, but with so many properties worth less than their current mortgage, it may be time to sharpen up our short selling skills.
This week Florida Realtor reported ”More than a quarter of all home sales in Palm Beach County last year were of bank-owned properties or homes purchased in a short sale, a sign of continued stress on a market where traditionally less than 1 percent of sales are of distressed homes.” We also know the Jacksonville area may have as many as 40%+ of their homes underwater.
Let’s take a look at this short selling market segment from the perspective of the Naples real estate bank, seller and buyer – Ok first the bank. Banks in general seem more amenable to short sales for a variety of reasons. First banks tend to lose less money in a short sale compared to a foreclosure – why? Well if the market is driving the selling price then the foreclosure-short-sale profit difference lies in the carrying costs, and carrying costs are much less in a short sale than in a foreclosure.
Banks seem to be move along a little faster in the short sale process these days but there are exceptions – like the place down the street from us where my eager buyer eventually bought a different property due to bank delays. In general the banks recent outlook toward short sales – better profits, speed, experience – are adding up to a steady increase in short sales volume – about 3% according to Florida Realtor.
What about the sellers? The seller’s perspective typically is they just want out. A short sale allows them a chance to get out from under a very tough financial situation where they owe more than their home is worth. There are tax consequences of accepting a short sale agreement from their bank but many times it is worth it to get moving again – either mentally, financially or both. One thing to watch as a Realtor is to make sure the agreed upon bank short sale price or price range is in line with the market. Like any listing you want to be price competitive with the comparables or the property is going to sit. Unlike your other listings that price reduction discussion down the road is going to be a lot tougher if not impossible – so think about walking from a listing if the price is off.
The buyer – who may be focused on short sales – needs to understand there is little room for price negotiation. That is not to say there is some room for negotiation but short sales may be unlike other deals. The bank (although they are improving) is unlikely to go back and forth negotiating – they may even have a take or leave it price.
We think short sales are going to continue to be a big part of Naples real estate. This year we should see continued increases in short sale volumes and we think the next few years will be more of the same. Why? Without a significant increase in price over 2005-2007 levels a good many homes may remain underwater. Sharpen up your skills and do not overlook this important part of the market.
Tell us what you think and have a great day.
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No legal, investment, or tax advice is being given in this Blog. Consult with legal, financial and tax professionals before acting on any real estate transaction. Actual real estate price and sales results are subject to market forces and are not completely predictable. The writings of this Blog are intended for the sole use of our clients.
Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others and enjoy Naples real estate.
Mark Goebel, PA
REALTOR Coldwell Banker 5th Avenue South
Mobile: 239.595.3921
Email: mark.c.goebel@gmail.com
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