BANK OWNED (FORECLOSURE) HOME SALES DATA FOR FOLSOM, CA–DEC 2011
BANK OWNED (FORECLOSURE) HOME SALES DATA FOR FOLSOM, CA – DECEMBER 2011
This is the latest monthly report of a four-year study of bank owned (REO) home sales in Folsom, CA. This report covers December 2011.
There were 16 REO homes sold in Folsom this month, up from 12 the previous month.
The average days-on-market increased from 49 the previous month to 67 in December. Two of the homes had been on the market for over 200 days and two others had been on the market for over 100 days. Obviously, some of the old inventory was cleared out. However, 38% of the homes that sold were on the market for two weeks or less, proving once again that well priced homes in good condition sell quickly.
The 16 REO homes that sold represent 23% of all homes sold in Folsom this month. The very low bank owned home inventory is one reason for this statistic.
The available inventory of bank owned homes in Folsom dropped to a 7-month supply, the lowest inventory level of bank owned homes in the past 15 months. The inventory for bank owned homes in Folsom peaked at a 2.8-month supply in January and has steadily declined since. The available inventory for ALL homes available decreased to a 1.6-month supply, down from a 2-month supply the previous month. Pundits tell us that a 6-month supply is neutral market, so Folsom remains a strong seller’s market for both bank owned homes and all other homes on the market.
The average cost-per-square-foot for bank owned homes was $ 141 in December, unchanged from November. The average cost-per-square-foot for ALL homes sold in Folsom in December was $ 157, up one dollar from the previous month. It has been moving within a narrow range for the past year.
The overall sales price for REO homes was 96.50% of the final asking price and 89.38% of the original asking price. Both of these numbers are lower than usual. The 89.38% number is a reflection of the banks ability to judge the true market value of their “toxic assets.” They did not do well on those homes sold in December. In addition, only 32% of the buyers paid the asking price, or more, for their bank owned homes in December. That too is lower than usual.
Based on the cost-per-square-foot statistic, bank owned homebuyers paid 10% less for their home than did buyers of non-bank owned homes in December. When we apply that to a 2500 square foot home, it represents a savings of $ 40,000: a considerable savings.
If you have any questions about purchasing a home in Folsom, a Folsom REO, or an REO anywhere in the area, feel free to give us a call (916) 337-0658.
The Data Follows:
Stunning Horse Property In The Foothills
We recently had the opportunity to create a slide show of this fantastic property. We included some of the many photos that are available on this web site. Feel free to view the slide show and view all of the other photos as well.
If you like the slide show, PLEASE select “LIKE” on the YouTube site. The more likes we get the more people are likely to see it. Enjoy!
THIS MONTH IN REAL ESTATE
THIS MONTH IN REAL ESTATE
Here is the latest This Month In Real Estate Video. This one, covering November, is designed to provide potential home buyers wil some information about the advantages of buying a home.
Short Sale 101. Part 4
Short Sale 101. Part 4
One of the most common questions asked about a short sale is, “why is this taking so long.”
Obtaining short sale approval and closing a short sale transaction is one of the most complex processes and real estate. There are many elements in the equation that makes up a successful short sale. Any single element can delay or scuttle the entire process.
The borrower/seller’s financial hardship, the various components of their financial picture, their ability to produce required documentation all must meet the loan servicer’s expectations and guidelines. The borrower/seller’s ability and willingness to respond quickly to that loan servicer’s requests are also essential to the success of any short sale.
The selection of the listing Realtor® is a key component. That individual must understand the short sale process thoroughly and be able to help the borrower/seller successfully navigate the short sale minefield. Many people do not know that there is no short sale training requirement for a real estate sales person or broker’s license. It is essential that the Realtor® be trained in the short sale process and, they must be willing to handle the many details involved. Any delays in responding to the servicer or any errors or incomplete documents submitted in response to the servicer’s requests will create delays.
The loan servicer’s ability to deal efficiently with a short sale requests is also critical. Several years ago, at the start of the recent “housing bust,” the loan servicers were unprepared for the volume of defaulted loans. They were buried with short sale requests and did not have anyone to process those requests. It has taken years for some of them to staff appropriately. Some still have not done so. This single factor was a major reason for delays and short sale processing over the past three or four years. Some servicers have made progress, and are handling the requests more efficiently. Others are still struggling.
A complicating factor in the processing of short sales is the identification of the decision-maker on each loan. In most cases, investors buy residential mortgage loans on the secondary market. Insurance companies, mutual funds and retirement funds are just a few of the investors that actually own the notes on the homes in question. A small number of loans are actually own and serviced by the lender who originated them. Some of these loans (notes) have changed hands so many times that it is unclear who the true owner is.
It is the owner of the note, who makes the decisions about whether to approve or reject the short sale request. In some cases, the owner of the note allows the loan servicer to make a decision. Usually the owner of the note provides the servicer with specific guidelines and authorizes the servicer to make the decision if the short sale request falls within those guidelines. In other cases, the investor wants to see the short sale document package so that they can review it and make the decision. This additional step adds considerable time to the short sale process. Each time the owner of the note has questions they request additional documentation for clarification. They make the request through the loan servicer. Each request delays the process further.
Everything mentioned above applies to each loan outstanding on a given home. If there is only one loan, the processing can be much faster. The exception is when there is private mortgage insurance on the loan. Private mortgage insurance protects the lender in case of default and private mortgage insurance companies approve few short sale requests because the short fall comes out of their pocket.
If there is more than one outstanding mortgage on a home the process becomes much more complex. Each lien holder must approve the short sale. In most cases, the value of a home will not cover the first loan balance. Therefore, if the home goes into foreclosure, the Junior lien holders will not get anything. Borrower/seller’s find it difficult to understand why second and third lienholders will not accept the small payments authorized by the first lien holder. After all, if foreclosure ensues they will receive nothing, right?
In 2011, California past Senate Bill 458. That Bill limited a lienholders ability to pursue
recourse if they approve a short sale. What this means is that if the second lien holder approves the short sale they cannot pursue the borrower/seller for the unpaid balance of the outstanding mortgage. If, however, the home goes into foreclosure, the second or third lien holder may pursue the borrower/seller for the unpaid balance. They can sell the note to a collection agency and will receive more cash than they would by approving a short sale. It is all about the dollar.
The buyer in a short sale transaction may be responsible for some of the delays if they are not responsive to communications from the loan servicer, usually relayed through the listing agent. It is not unusual for a loan servicer, using an independent appraisal, to counter the offer accepted by the borrower/seller. The goal is to get the most from the buyer. The buyer then has to decide if they like the home well enough to pay the higher price or walk away from the purchase.
Once short sale approval is given, there are strict timelines that the buyers and sellers MUST meet. The fact that the investor and loan servicer have taken months to reach a decision does not matter. They now set deadlines that the buyer, seller and Realtors® must meet. The timelines are very short. Failure to meet those deadlines can result in termination of the short sale process and foreclosure of the property.
A buyer can wait for months only to learn that the lender rejected the short sale request. There is no guarantee that any short sale property will close escrow. Buyers should know this before making an offer on a short sale property.
Buyers can take certain steps to improve the odds of success if they decide to attempt to purchase a short sale property. Most revolve around the selection of a knowledgeable Realtor®. That individual can guide the buyer through the process and help them avoid the more difficult roadblocks.
A good Realtor® can help the buyer try to avoid dealing with homes with private mortgage insurance and junior loans. They can find out which loan servicer or servicers are involved. Some are easier to deal with than are others. They can talk to the listing agent to determine if that individual has any training or experience in handling short sales. They can also learn the general nature of the borrower/seller’s hardship to judge the likelihood of lien holder acceptability.
The good news is that most of the loan servicers are fully aware that a short sale is better for their investor than would be a foreclosure. After years of dealing with the process, the data is clear on that point.
A short sale is far better for the borrower/seller than is foreclosure. The impact on one’s credit score is not as traumatic and most sellers are able to purchase another home much sooner if they have an approved short sale on their record, as opposed to a foreclosure. And although it may not seem like it to those in that position, many do recover and end up in a beautiful home in just a few short years after a short sale.
Buyers find that the lowest prices on the market are on short sale properties. However, they have to understand the process and the odds of failure before getting involved. The have to select a knowledgeable and experienced Realtor® and they have to have a lot of patience.
If you are having financial problems that force you to consider a short sale, or if you want to take a shot at buying a home that is a short sale property, feel free to contact us for answers to your questions or to start your journey.
(916) 337-0658.
Short Sale 101 – Part 3
Short Sale 101, Part 3
In the earlier posts in this series, we discussed the primary requirements a distressed homeowner must meet in order to obtain a short sale approval. It might be helpful, at this juncture, to go into some detail with respect to the documentation that will be required if the bank before they will consider approving a short sale. Borrowers contemplating a short sale should be aware of these document requirements.
As we indicated earlier, everything must be supported by documents that will be used to verify the borrower’s claims. Therefore, one should take care that all of the information provided matches.
The first document that any bank will require is a written request for approval of a short sale. The bank has to know what you want to accomplish. Second, is the borrower’s hardship letter, explaining in some detail the nature of the financial hardship that prevents that borrower from continuing to make their monthly payments.
The third document required will be the borrower’s authorization allowing the bank to speak to the borrowers Realtor©. Without that signed authorization, the bank may not discuss your situation with your Realtor© or anyone else.
Almost every bank will require copies of the borrower’s tax returns as filed for the past two years. The bank will require every single page and every single schedule filed with the IRS. They will match the data provided in the tax return with other documentation you will have to submit. All W-2s and/or 1099s filed with the IRS must be included for the tax years involved.
The bank will also require documentation verifying all income streams, paycheck stubs, commission checks, documents reflecting bonus payments, tips or any other documentation pertaining to the borrower’s income. If the borrower’s income comes from a business that they own, they will require copies of the books for that business.
The bank will require documentation reflecting all of the borrower’s liquid assets, checking accounts, savings accounts, money market funds, Christmas savings account funds and documents pertaining to stock, bond, mutual fund or other investment accounts.
They will also require documentation pertaining to non-liquid assets such as any other real estate owned, vehicles owned or leased or other major assets owned.
If, as frequently happens, the bank is slow in processing your short sale request, it may be necessary for you to provide more current documentation on your income or your assets. They always want the most up-to-date information. In addition, the processors will not forward your file to a decision-maker unless all of the data is current. There is a no tolerance policy involved here. Space borrowers who are not diligent record keepers may find it necessary to contact their banks, investment companies to obtain the required documentation on that company’s letterhead. This process could take some time. It may be prudent to collect the documents in advance so that you do not delay the process of submitting your short sale package.
We reiterate that it is very important to select the right Realtor© to handle your short sale. A short sale package may exceed 110 pages of documentation when submitted to the bank. If it is inaccurate are incomplete, the bank will reject it. Most distressed homeowners have not made their monthly mortgage payment for some time. Therefore, the foreclosure process has begun and time is of the essence. Delays on the part of the borrower only hinder their chances of success.
If you have any questions about the information covered in this post, or any of the previous posts in this series, feel free to give us a call at 916-337-0658. We will be happy to clarify any of the points made.
Stay tuned for more information on the subject.