Where Are The Best Deals In San Diego Real Estate?
The best real estate deals right now are bank-owned foreclosure properties (REO’s) and other distress sales known as “Short Sales” (pre-foreclosure). But those aren’t the only good deals available to home buyers. There are also very good deals to be negotiated with private sellers who have owned their homes for many years but now need to sell the property for one reason or another.
In a Short-Sale, bank approval is required to forgive debt to the home seller who owes more on the home mortgage than the house is worth. The problem with Short Sales is that the Short-Sale approval process is long and uncertain. The time between application and approval of a Short-Sale is on average 6 to 12 months. Interested buyers rush to submit offers to purchase these discounted homes, only to wait for months for a response from the bank. Prospective buyers of Short-Sale properties often become frustrated with the wait, or wait patiently only to learn that the bank insists on a higher price or different terms. Sometimes bank approval never comes and the bank forecloses and repossesses the property instead.
In contrast, after foreclosure the banks seek to sell the foreclosed homes as quickly as possible. The banks price the REO assets (foreclosed homes) well below market value with the express goal of receiving as many offers as possible in the shortest amount of time. The strategy is very successful. Multiple bids and overbidding is common among competing home buyers throughout San Diego County in 2009. Buyers of foreclosure properties must be financially well-qualified, pre-approved for a loan, and prepared to move quickly when the right foreclosure property comes on the market. A good knowledge of property values is important, because the lucky buyer will often need to bid at or above asking price in order to purchase the property.
Activity in the San Diego real estate market has picked up, and inventory is actually pretty tight. There is a 4 to 6-month supply of homes for sale in most neighborhoods, with a six-month supply considered a “normal market”. The deceptive thing about the inventory numbers, however, is that Short-Sales make up about 2/3 of the current listings in the MLS. The Short-Sales typically remain Active in the MLS during the infamous 6 to 12-month bank approval process, making it seem as though the properties are available for sale, even though they would be “Sold” if the banks were more quick/efficient with their Short-Sale approvals. Most Short-Sales that linger in the San Diego MLS as “Active” actually have an accepted offer (with multiple backup offers).
There are great deals on homes for sale in San Diego and even in upscale communities like La Jolla, Del Mar, and Rancho Santa Fe. And bank-owned foreclosures aren’t the only place to look for properties at a discount. There are other great deals also from private sellers too… but the great deal isn’t always apparent from the list price. If it isn’t a bank foreclosure or a short sale, then the seller is going to negotiate. If they need to sell the house they will often come down on price substantially.