Have Short Sales & REO’s affected the Hollywood Riviera? – Since January 1st, 2010 – there have been 6 REO’s (Bank Owned properties – negotitations with the bank) and 7 Short Sales (Home sells for less than the mortgage notes so bank has to forgive the difference. Negotiations with the bank not the seller.) And this is out of the 63 sales we’ve had this year – so about 20% of the sales so far. Question now is have these sales affected the market? Out of the 6 REO”s – 3 of them sold OVER asking price. Typically the bank will aggressively price a property it owns as to get it off the books immediately. As you can see, homes that are aggressively priced still sell for “market” price. When the low list price is used as a strategy it usually equates to shorter DOM for those properties as well – the 3 that sold over asking all went into escrow within a week.
Now those 7 Short Sales are a different story. One such short sale took only one month to put into escrow – but it took 5 months to get it to close escrow. A different short sale took almost 6 months to put into escrow; it was in escrow a few times and kept falling out, but the last time it went into escrow it only took one month to close. There are no guarantees when dealing with the bank. When things are taking too long often buyers walk away from the table and go find a different property.
In 2009 – there were only 2 REO’s and 3 short sales – so the Hollywood Riviera certainly has had it fair share of increased “distressed sales” this year over last year. With the banking industry’s self imposed moratorium on foreclosures now in effect, who’s to say what will happen, but the number of REO”s will certainly decline for a while.
In 2008- there were 2 REO”s and 1 short sale – all in all, the short sales are what we are seeing more of across the board. And honestly, it’s easier to sell an REO usually than a short sale.
The REO’s downside is that the buyer will get NO disclosures regarding the property’s history and sometimes the property will have missing appliances and/or be in bad shape. It is important for the buyer to hire a qualified home inspector to report on the overal condition of the property. In a short sale, the seller is usually still a participant in the transaction and can provide the proper disclosures.
So have short sales and REO’s affected the Hollywood Riviera? – I’d say yes they have. 20% of market share for 2010 sales so far is a big number and one that can affect average market price and increase the average days on market. With that said, properties are taking a lot longer to sell in this 2nd half of 2010 than the 1st half of the year. One thing to keep in mind however is that local real estate news trumps national real estate news for what’s really happening in “your” neighborhood. All in all, we are very lucky here to not have been as hard hit as other areas on a state and nationwide basis.
Kelly & Laura have been making regular posts to their website/blog https://sellinghomesonthesouthbay.com/ for almost 2 years now. Keep coming back for regular updates regarding Hollywood Riviera and South Bay real estate information.
