Finally some good news on the delinquent mortgage front in news from the Mortgage Bankers Association.
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 8.22 percent of all loans outstanding as of the end of the fourth quarter of 2010, a decrease of 91 basis points from the third quarter of 2010, and a decrease of 125 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 46 basis points to 8.93 percent this quarter from 9.39 percent last quarter.
Read the full press release from the Mortgage Bankers Association here.
Delinquency means more short sales. Something that has been burdening the real estate market here in Scottsdale, Az.
Why do short sales confuse home buyers?
There are a number of reasons why short sales are frustrating and confusing. But here is the one that I find resonates most with my clients.
Here is the situation there are 3 houses for sale in a street. Two are conventional sales and one is a short sale. The short sale is priced significantly below the other two properties and so of course the home buyers are interested in that one.
Why is the short sale priced so much lower?
Short answer is because the person setting the price doesn’t ultimately care about it. They only want permission to walk away from the property debt free. So short sales are priced to get a quick offer that can be sent to the bank to get the process started. The bank has not pre-approved this sale price in almost all cases. You have no certainty that they will ever accept this price.
So the number one confusion for buyers is the gap between the conventional sales and the short sales in price. From my experience what happens often is that buyers will then make offers on the conventional sales but using the short sale pricing as a guide. These offers are rarely accepted.
If you want to buy at short sale prices you really just need plenty of patience. But even with patience there is no guarantee a sale will go through.