Sarasota Foreclosure Sales Rise in August
Sarasota - August 2012 saw a modest uptick in foreclosure and short sale closings. Initial foreclosure filings have dropped by over 20% month over month. Looking back through the past couple of years, there has been at least 200 more filings than sales per month with the exception of late 2011. This indicates the shadow inventory will remain for some time to come. Foreclosures can take years to work through the court system. Several outcomes are possible that would prevent a property showing up as a sold foreclosure. Some of these resolutions include a borrower winning their foreclosure case or the sell their home via the short sale process. In any event, foreclosures will be a part of the market for some time to come.
Uptick in Sales Attributed to Foreclosures and Short Sales
This increase helped to bolster an uptick in sales from July and represented about 16% of total sales. Short sales represented a near time high with 18.6% of total sales. It has not been since February of 2011 that 65% of market sales were without a bank being involved on the seller’s side of the transaction.
The Summer Price Retreat is Ending
Month over month declines in average cost per square foot and sales price are due to the increased influence of these properties selling. Over the past several years, the summer has demonstrated itself to be a slower time with fewer sales. This year’s pattern is no exception. It is not unusual for banks to underprice foreclosure listings in an effort to pull buyers in to a competitive bid situation or pseudo auction situation. This is the reason for a higher sales price to list price ratio of these properties, a fast sale, and more favorable terms for the bank such as all cash transactions.
Cash Remains King
Of the 2026 foreclosure sales this year through today in Sarasota and Manatee counties, 1458 (or 72%) are listed as “cash” transactions. This puts any buyer who needs financing at an extreme disadvantage when buying a foreclosure. This is especially true in the “under $100,000” market. Of the 1,158 foreclosures in this lower price range that sold, 974 were all cash or 84%.
Be Prepared Before you Look
You need to have your financing in order before considering a foreclosure of short sale. Either a pre-approval letter or “proof of funds” are required for transactions. In many cases, you may be required to get the pre-approval from a specific lender. In the $50,000-$100,000, the average sales to list price ratio is 99% of asking. Over $100,000, the ratio is 98%. Normal sales between $50,000 and $500,000 this year are running about 94% of asking. This should give you an idea that if you plan on lowballing a property, foreclosures aren’t the place to do it.
Remember, every property is unique and every situation is different. Our knowledge of the market can help to guide you when purchasing real estate.
Sarasota Real Estate Group