Short Sales vs REO Properties

April 17th, 2008 categories: Real Estate News

There was an interesting article today “Why Lenders are Leery of Short Sales”

According to research from Clayton Holdings Inc. indicates that lenders lose only 19 percent of the loan amount on average with a short sale, compared to 40 percent on a traditional foreclosure sale. However, short sales require approvals from primary lenders, servicers, investors, and home-equity lenders–a process that can take several months to complete.

So I decided to look at Gilbert Real Estate listings and look at the difference in list price vs sold price of homes that closed as short sales and those that have closed as REO as well as how they compare to homes for sale from “non-distressed” sellers.

This chart depicts that data (NOTE: the data is only as good as the agent that enters it into the MLS )

I looked at homes listed in Gilbert, 1800-1900 sqft, with home sales from Jan 2008 to the present. “Normal” listings are homes for sale in Gilbert from “non” distressed sellers.

From the sold data: Ave Sale Price: Normal = $256,355, Short Sales = $226,184 and REO = $204,941

Normal/REO % difference = 21%

Normal/ShortSale % difference = 10%

The percentage’s may not be the same as national data- but real estate is local and this is a small sample of data.

As a buyer looking for a “great deal” in a REO or short sale- there are some things to keep in mind. Most, if not all, REO properties are sold “AS-IS” no repairs will be made, there will be no disclosures and in some cases the homes are not in great condition. The same can be said about short sales.

This entry was posted on Thursday, April 17th, 2008 at 10:58 pm and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.