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MLS Short Sale Statistics Can Be Deceptive
Drawing conclusions from multiple listing service (MLS) statistics can be as difficult as navigating Southern California streets during a rainstorm. The force of a shallow stream can propel an automobile downstream and even apparently calm waters can mask eroded roadways. Similarly, Inland Empire numbers for pre-foreclosures and foreclosures can be deceptive.
The Inland Multi-Regional MLS listing form is filled in by Realtors who are obligated both to provide accurate information and to promote the property on their clients' behalf. To ensure the property is seen by Realtors who may routinely eliminate short sales when searching for properties, the listing agent may leave the "Short Payoff" field blank and instead put the information in the office comments section. The property isn't listed as a Short Sale, but the information is provided. As a result, searching for "Short Payoff" properties yields only those listings where the "Short Payoff" field was completed.
This slight-of-hand may change in the near future; other Southern California MLS companies require the "Short Payoff" field to be filled when a transaction will be a Short Sale.
The true number of Upland pre-foreclosure listings - defined as homes requiring lender consent for a short payoff -for this article was determined by reviewing all the information supplied by Realtors for each of the 277 Upland listings in the early morning hours of Feb. 10 (a task made easier by insomnia).
Half the Upland homes currently for sale are "distressed" and either in pre-foreclosure or have been foreclosed, according to information in the local multiple listing service. One-third of the 277 homes listed for sale in the City of Gracious Living on Feb. 10 was facing foreclosure, one in seven was bank-owned, and four out of 10 were shown as vacant. It's a situation the city is countering by offering liberal down-payment assistance to first-time home buyers who purchase a vacant home. Read more on my website ...
Of the 97 Upland listings which indicated lender approval of a short pay-off is required, only 76 were listed as "Short Payoff" by the listing Realtor. Many Realtors are reluctant to show Short Sale listings because of the length of time to get the lender's response - sometimes many months. However, some lenders have developed a process to respond fairly quickly to Short Sale offers, so you shouldn't ignore Short Sale opportunities.
In 21 Upland listings, the "Short Payoff" field was left unchecked, and only a notation in the office comments section that the lender must approve the sale indicated a Short Sale situation. It seems reasonable to assume that pre-foreclosures in other Inland Empire cities similarly are under-reported in the MLS.
I don't plan to go through each of the current listings in the remaining eight cities in our service area - it it would take a seriously sleepless night to review each of the 1,460 homes listed for sale in Fontana! - but I always review listings in neighborhoods where clients are considering buying or selling a house while studying that particular market and consistently find under-reporting in the Short Sale listings. You can see the listed Short Sales and Foreclosure statistics in my weekly Home Market Activity reports for the nine Inland Empire cities in our service area. (Click on Home Market Activity link under cities at right.)
The flood of foreclosures threatening local home markets last fall was blocked in November when foreclosures were temporarily suspended. The freeze seemed to give lenders an opportunity to cope with the huge number of mortgage-holders attempting to modify overwhelming loan payments, give the federal bail-out of the financial market time to work, and allow Congress to find a way out of the nation's economic turmoil.
It's too early to tell whether government and lender efforts to aid distressed homeowners will be effective, but we do know this is a great time to buy a home. Tenants who thought they never would be able to own a home are now able to purchase.
City-backed down payment assistance programs help residents with limited income who want to become homeowners. Parents and grandparents with equity in their own homes also can help young families invest in their own American Dream. Families who have outgrown their present home now have an opportunity to move into larger quarters or more desirable neighborhoods that were unaffordable two or three years ago.
Two words of caution:
(1) Always get a Good-Faith Estimate and ask questions about the terms of a loan before signing an application from a mortgage provider. Talk to direct lenders, not mortgage brokers, and don't hesitate to shop around. Loan fees vary widely.
(2) Home buyers who wait for home prices and monthly payments to decline further may get an unpleasant surprise if interest rates rise before they act. On a $250,000 home, you'd pay $150 more per month for a loan at 6 percent versus a loan at 5 percent interest. To put it another way, to keep the monthly payment about the same, you'd have to buy a house worth $25,000 less.
If you are planning to buy a home this year, or thinking about selling your present house, we would like to have an opportunity to discuss your goals and talk about how we could help you reach them. Please call (909) 261-3541 to speak with either Jim Jackson or Ila Josephs.
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