San Diego home buyers are sick and tired of the run-around that they are getting from the banks with foreclosure sales and short-sales. The buyer sentiment about these “distress sales”, combined with a low level of inventory of homes for sale in San Diego, has given rise to new hope among prospective home sellers.
Bank-owned properties are being offered below market values so that the banks can quickly unload their foreclosure inventory. But the competition among potential buyers is fierce. Most of these San Diego REO sales are being overbid, often by all-cash buyers who are given preference over individuals who require home mortgages. Furthermore, most REO foreclosure properties in San Diego are in below-average condition, with no home owner to provide disclosures about problems with the property or information about needed repairs. And last but not least, the real estate agents handling most foreclosure sales in San Diego are generally aloof or unresponsive to home buyers. The combination has been causing significant distress to prospective buyers of these distress sales.
Short sales are also receiving multiple bids, often above asking price. But the short sales are even more difficult for home buyers because the short sale process takes on average 6 months to a year. During that waiting period the short sale properties remain on the San Diego MLS as “Active” listings. By the time the short sale is approved by the bank, most short sale buyers are also finding that they’ve been outbid. Others would-be buyers wait for short-sale approval only to learn that the bank has refused entirely to approve the short sale, opting for foreclosure instead.
Property sellers must acknowledge that their home values have fallen. The median price of $290,000 is 44 percent below the $517,500 peak in November 2005. But prospective home sellers should also remember that, for the reasons stated above, the bank foreclosure properties and short sales typically sell below “current market value.” Properties in good condition, priced properly, and marketed effectively by experienced San Diego real estate agents are selling quickly. Home owners who have been on the fence about a move should seriously consider taking this opportunity to sell, pull out their equity, and trade up into a larger home.