Truthiness and Short Sales

In order to understand the “Short Sale”, it is helpful to use the following terms:

Truthiness is a word that television comedian Stephen Colbert popularized to describe things that a person claims to know intuitively or "from the gut" without regard to evidence, logic, or facts.

short sale is when a bank or mortgage lender agrees to take less than the loan balance in full satisfaction of the debt owed by the borrower.

illusion -something that deceives by producing a false or misleading impression of reality.

specious - superficially pleasing or plausible though lacking real merit:

The Short Sale embodies all of these things. But those who think it is a magic bullet that saves the homeowner, are relying on truthiness. Here in SW Florida, the results suggest something quite different. Out of roughly 20,000 homes and condos that are for sale, approximately 4,000 are listed as “short sales”.

The question is “how many of these short sales listings are actually sold?” -- Less than 300.

What this means is that the short sale process does not rescue a substantial number of the troubled borrowers. The principal reason for this failure is the extended time, usually 2 – 3 months before a potential Buyer gets a response from the Lender Bank. In most cases, the Buyer becomes impatient and withdraws the offer or the Seller runs out of time and terminates the Short Sale process and eventually the Bank incurs another foreclosed property.

I think that the effect of increased number of foreclosures is still in its early phase in that the Banks are taking ownership of more and more properties. And the longer these properties “marinate” in the Bank’s portfolio of non-performing assets, the greater the pressure will be on Banks to significantly discount prices.

But we aren’t there yet… The Banks are still reluctant to aggressively discount the prices for these bank-owned properties. But it is just a matter of time. Sometime during the next 6-12 months, the wholesale discounting of bank-owned property will begin with speed and determination.

This will present a once-in-a-lifetime “Pricing opportunity” for Buyers. Buyers will benefit from the discounted prices for bank-owned properties to be sure. But the number of discounted properties will also undermine the normal market pricing dynamic and virtually all properties will be bargain priced. In the end, I envision prices returning to the levels that existed prior to the great housing bubble and run-up of prices.

It's Paradise for Canadian Buyers !

It's Paradise for Canadian Buyers !

If you were a Canadian and came down to Southwest Florida in 2006, you found that buying your vacation home in Paradise was a most unpleasant experience.

In January of 2006, the Canadian dollar was worth only $.87 US. Consequently a four bedroom/3 bath home listed for $400,000 US but cost Canadians $460,000 Canadian. And so many Canadians saw their piece of Paradise as being more and more unattainable.

But here we are two years later. This home in Ft Myers has fallen from $400,000 to $249,000 today. It still has 4 bedrooms and 3 baths in a gated community and only 5 miles from the gorgeous beaches of Southwest Florida. However, now it costs Canadians $249,000 with the two currencies at parity.

For a home like this and many others, it’s a “Half-Price Sale” for Canadians !

So leave your “balmy” 32 degrees in “Ta-ron-ah” and come get your piece of Paradise where it’s 88 degrees today...

To see more, go to CharliePigeon.com