Yesterday morning I was out looking at homes with a buyer ( in the falling snow!) and at least half of the properties we saw were short sales or foreclosures. In fact, my buyer found one she liked and considered making an offer…until I called and talked to the listing agent. We learned that it was a short sale with two mortgages involved…there were already two offers on the property and another may be coming…they had already been waiting a month for a bank response…AND they just learned that the two banks may not come to an agreement so they may not be able to negotiate a short sale at all!
Just as the snow is slowing down the arrival of spring, could short sales be slowing down pending sales? The weekly market report from the Minneapolis Association of Realtors yesterday reported that accepted purchase agreement are behind last year at this time by 18.7%. There has never been a bigger supply of homes available…home prices are good for buyers…interest rates are again approaching historic lows…so why are homes not selling?
One reason is probably the loss of 100% financing…with that gone, some buyers have to re-group and find other down payment sources or take time out to save more. Case in point, I have a client doing exactly that, waiting another 6 months or so before selling so she has more funds available for her next purchase…and someone who may be interested in purchasing her home is also waiting to save up for her down payment.
The change in financing is an obvious reason for the lag, as buyers play catch-up after the rules have changed. But I hadn’t thought about short sales being a factor in slowing down pending sales until yesterday. Could it be that buyers are still writing offers, they just aren’t being negotiated as quickly? In addition to dragging down prices, short sales may also be contributing to a slow-down in the number of accepted purchase agreements as the offer process stretches out from days to weeks and months. Just my musing for the day…