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August 17, 2009

New real estate poll: Foreclosures and short sales

Start looking at homes on the market, and it won't be long before you come across foreclosures and short sales. In early July in Howard County, for instance, four out of every 10 homes for sale under $200,000 fell into those "distress" categories.

So -- who's buying?

You tell me:

Investors are the traditional buyers for distress properties, but first-time buyers have looked at this market post-bubble in hopes of getting a deal (or something in their price range).

The "yes but" I often hear is condition -- and for short sales, the uncertainty. Short sales require a lender's OK, and lenders sometimes take months to respond to an offer ... even if that response is a simple "no." (Real estate agents expect first-timers to stop considering short sales now that the deadline for the $8,000 tax credit is approaching.)

Got a story to share? Comment away.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (6)
Categories: Polls
        

Comments

I gave the short sale route a try until a better option appeared. After 4 and a half months of silence from the seller's bank I gave up and chased after a new construction townhouse. I've been looking for a place of my own all year long. As a first time home buyer I honestly expected this process to be over in a month or two and not the year it's almost taken. Sure, I want the tax credit, but I would have bought anyway. That tax credit will help pay down college loans. Fortunately, the builder tells me they'll be ready with time to spare. It's nice to be able to see real progress from the builder instead of dealing with a short sale in which has a bank that can't even be bothered to send a periodic status update.

I was thinking of your situation when I wrote this post, BigDragon! Is the price of the new home about the same as your offer on the short sale?

I recently closed on short sale property in early August. We wrote the contract in late January and felt the waiting game-pain for 6 months. Fortunately I was a first time home buyer and was able to go month to month at the apartment I was renting (lease expired 5/31).

The process was painful and too often unexplainable. We received approval in mid March, only to find out the seller filed for bankruptcy a week earlier. This required an extra 2.5 months for the home to be released from the bankruptcy court since it could not be considered an asset (and to prevent the trustee from taking ownership). After release, we had to wait for another approval by the same bank (for the same offer) which took quite some time. The overall feeling I received from the seller's bank was that they had no interest in taking the property off of the books and needed constant prodding to keep the file from disappearing on someone's desk under a pile of (proverbial) paper.

While my patience and persistence paid off in the end, the process definitely took a toll on my mental well-being. The last month or so became agonizing- checking my email almost hourly for updates that didn't come or were of little substance. Also, that "great short sale deal" I thought I was getting didn't look quite as lucrative when prices in my county fell ~17% in the time I was waiting to go to settlement. Fortunately I think I still did well looking at comps in my neighborhood and recent appraisals.

Even though I've made it sound bad, in the end I found the home with the features I was looking for and some perks that I wouldn't have been able to afford otherwise. I got a great interest rate (locked before the run-up in late May) and the first time home buyer credit on my 2008 taxes.

The price of the new townhouse is what had me the most worried. It's $50k more expensive. However, it's got a better layout, the builder is paying all the closing costs, and I've been pinching pennies all year so I have more to put down. My agent insists that the short sale bank would probably have countered for a higher price based on recent comps too. I tend to agree with that. The difference in price and monthly payment isn't as big as it initially seems, although the commute is longer by 10 minutes. The short sale delayed me enough that I came across this, so it looks like everything will work out in the end. =)

I'll probably get sick later this week and then again for the week of closing. I get buyer's remorse easily. =P I will say that it seems like the Baltimore/DC area is definitely more competitive than it was earlier this year. The good stuff goes fast. The builder was busy.

I am also first-time home buyer and have been waiting for 14 weeks (contract ratified in May). The lender is Bank of America. My agent told me the bank will only say yes or no, and there won't be a counter offer. I am wondering if it is true, Any advice?

Hi, winterpeace -- it seems to be a case-by-case situation, but I often hear people saying that banks aren't counter-offering on short sales. If your agent has dealt with Bank of America before (and recently), he or she is probably giving you good advice.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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