Friday, 06 November 2009
Where are we and Where are we going?
By the time you read this I will have been on Fox 21 News and spoken about Short Sales & Foreclosures. While it’s a very tiring and old subject it is something that will be part of the Colorado Springs landscape for another 1 ½-3 years.
Through the month of September there were 4106 foreclosure filings. Last year we were at 3400. Last year the total was 4602. This year we will be over 5000 foreclosure filings. All statistics are pointing that 2010 will have again as many as we will have in 2009. Because we will have another bad year of foreclosures we will also have a lot of short sales.
What is the difference? A foreclosure is when a homeowner cannot or does not make house payments. Generally a foreclosure will start 6-8 months after the last payment was made. The bank turns it into the legal dept which take another 1-2 months to process and post a “Notice of Election & Demand”. This is the technical word for foreclosure. The homeowner then has 120 days to “Cure” the note and the defienciency. If the homeowner does not payoff the loan, make the payments in full or short sale successfully, the bank forecloses and takes the home back. At that time the homeowner is made to leave the home by sheriff’s order.
A short sale is a “Cure” for a foreclosure. A short sale is when the homeowner and the bank settle on a loss to the bank through a sale. In English it means a sale for less than is owed on the mortgage. Generally it takes a real estate professional with a CDPE (Certified Distressed Property Expert) to negotiate with the bank in the sellers’ behalf. A seller must have a valid reason for selling and have hardship that is causing the reason to sell. Banks are getting better than they were a year ago in working these out.
From a credit point of view a short sale is very preferable. From an economic point of view a short sale is also better. In keeping neighborhood values, a short sale is better.
So where are we going? I think that foreclosures are here for awhile. I think the filings will continue to be in the 5000 a year. However I feel instead of 2 in 10 of these going short sale, 5 out of 10 will. This will keep values stable. The high end market $400K and above unfortunately will feel lots of foreclosure activity. There is lots of inventory and no one to buy them. That means foreclosures and as much as 25-30% drops in price.
I am a CDPE certified realtor. I have a department dedicated to it. If you find yourself slipping financially, please call us at The Maecker Team for your confidential interview.