There have been two great articles to hit this week. Pending home sales have shown an increase in sales for the past nine consecutive months. As inventory continues to come down and sales continue to go up, we will start seeing a more balanced market with a healthy amount of homes to choose from and a good number of buyers to choose them.
The second bit of good news is that the government is stepping in to help streamline the short sale process. (Did I just use government and streamline in the same sentence?). Well it’s true and hopefully this new system for short sales will make the process much less draining and time-consuming for buyers, sellers and Realtors.
Currently the average time for a short sale transaction from the contract to the closing can take anywhere from 90 days to more than six months. That’s a long time to ask a buyer to wait when there are plenty of homes to choose from on the market that can close in 45-60 days. With the proposed changes from the Treasury Department, mortgage companies will have to approve short sale terms, including the minimum list price BEFORE the home is put on the market. The changes are designed to help mortgage companies across the board adhere to a uniform standard in order to create efficiency. These new standards aren’t required to be put in place until April 2010, which means buyers hoping to reap the $8,000 tax credit will likely not benefit from these changes.
Some things to keep in mind from the two bits of information released this week:
1. If short sales will have approved listing prices when they’re put on the market, sellers who aren’t in a short sale position will have to be even more competitive with their pricing. Currently, when short sales go under contract, sellers have three – six months to adjust their pricing and sell before a low sale becomes part of the comps an appraiser will use. Now, they will be competing even more fiercely with these properties.
2. As sales continue to rise and short sale lenders start to approve minimum sale prices, values will likely continue on their downward trend even as sales increase. The only way values won’t decrease is if there are multiple offers on properties to drive the pricing up, making a property sell over the list price. This is common in property valued under $200,000 where the bulk of buyers are.
3. Now is the time if you are a seller or a buyer to get off the fence before you get impaled by it. There are positives for sellers to put their homes on the market, as sales continue to increase. And positives for buyers as rates are low and incentives are abundant.