Sarasota Short Sales

Short sales came into play w few years ago as sellers began to see their equity slip and become “upside down” on their mortgages.  Couple that with a deteriorating employment scene and sellers were left with no choice other than to ask the bank to take less.  In the beginning, neither the banks nor agents really knew how to handle them. 

It seems more and more buyers come to us wanting to avoid short sales.  They have attempted buying a short sale or have heard bad things and wish to avoid them.  We responded by incorporating the option to ignore, include, or exclude short sales in searches.  Even with all the media and press articles on how to sucessfully close short sales and the resources dedicated to handling a short sale for a seller, it is questionable anything is really any better.

Let’s look at the numbers for all residential propety with a Sarasota address this year.

   Normal Sales  Foreclosures  Short Sales  Total

 Active Listings

 2,193
82%

  101
4%		  385
14%		  2,679
 Under Contract

 324
28%

  113
10%		  704
62%		  1,141
 Sold - 2011  2,832
62%		  796
18%		  897
20%		  4,525
 
What immediately jumps out is that 62% of the pendings are short sales but only 20% of this year’s sales actually close.  What this says is two out of three buyers will end up frustrated and without a home purchase.  The majority of the sales are what I call normal sales – a seller wanting to sell and a buyer who wants to buy.
 
While the market is much better than in past years, right now there are some of the best deals out there.  Buyers often see an active short sale as the lowest cost home in the area.  Sellers can reduce their price as low as they want to woo you in.  After all, it does not matter to them what they get because the short sale will net them zero regardless of sale price.  The issue of what the bank will take comes into play only after a contract is written and your contract, along with an enormous amount of financial data and hardship claims are submitted to the seller’s bank.  Do not blame the seller; it is generally the bank’s rules everyone has to play by.
 
Let us take a look at some other interesting market statistics.
   Normal Sales Foreclosures  Short Sales  Total 

Active Listings
  Avg. List per Sq. Ft. 

  $253.84 $117.71  $120.38   2,679

 

Under Contract
   Avg. Days to Contract

 

$153.94
146

 

$79.39 
55

 

$95.41 
174

 

1,141 

 

Sold This Year
   Sales Price $/sq.ft.
   Avg Days to Close
   Avg Sales/List Ratio

 

$170.30
$154.95
178
92%

 

$ 78.90
$ 76.74
 94
98%

 

$111.25
$101.77
299
93%

 

4,525


What you can expect, if you are one of the lucky third of those who put offers in on a short sale and actually end up closing, you will pay 93% of asking on average or about 1% more than a “normal” sale and you will wait an average of 121 days longer to close.

The larger cost per square footage number for normal sales reflects the make-up of normal sales vs. foreclosures and sort-sales.  “Normal” sales tend to have more of the upper end homes.  The owners of these properties tend to have the resources to manage themselves through the downturn over the past few years.  In other words, there are many more high-end properties in the normal category than there are in the other two, which pushes the average cost per square foot up.

Part of the bank’s approval process involves a price opinion from a non-involved third party.  They will know what the house is worth and work from that price, not the sellers.  If the two are close, you have a better chance but still no guarantee.  The opportunity to buy a short sale 20% under market is simply not in the cards.  Based on the valuation numbers and the other considerations the bank takes into account, you are generally better served negotiating with a seller who can sell without a bank approval.

There are always exceptions to the rules and we know which short sales you might want to chase.  Every home and the circumstances behind the seller’s situation are different.  Individual homes can be way off the averages so make sure you have a local expert to help guide you through the purchase process on your home.  John Woodward and his team help you know the area you are buying and arm you with the information needed to develop a strategy.  That is how we feel you can buy your dream home for the best possible price and terms.

We are the local experts when it comes to the Sarasota Real Estate Market and look forward to helping you find the best deal on your new Florida lifestyle!

Happy buying :)

John Woodward
Broker/Owner
Sarasota Real Estate Group
Selling Homes Since 1991