Dakota County Short Sale Analysis – December 2009
January 4, 2010
Yesterday, I posted an analysis showing the relationship of successful single family home sales in Dakota County as compared to their tax assessed value for the month of December 2009 (Single Family Home Sales Analysis). The data used in that report showed that the average traditional home (one that is not a bank owned or short sale) sold for 86.6% of tax assessed value.
Short Sale Analysis
For those new to what a short sale is I did a more detailed breakdown in a previous post here (Short Sale Rules Benefit Dakota County Homeowners). Because the bank is negotiating to take less than owed before the property goes through foreclosure you would expect that these homes would sell for less than a traditionally sold home. Here is the report -
For the month, there were 19 homes that successfully closed using a short sale (or at least were identified that way in MLS). On average, the average short sale home sold for 73.4% of the Dakota County tax assessed value. So, buyers who were patient enough to make it through the short sale process were rewarded with a better deal. Of course, we don’t know the condition of these homes and many times a short sale home will not be the move-in ready property that a traditional seller is marketing.
Statistical Note
One property that stands out on this list is the one at 10853 Alameda. It looks like they did a terrible job of negotiating based on these numbers. That property started on the market at $899,000 so maybe they thought they were getting a good deal but the statistics here would seem to indicate that the home should have sold for $100,000 less than it did. In fact, the property actually skews my results. If you took out that one property the average of the other 18 homes sold for 70.7% of tax assessed value in Dakota County.
Certified Distressed Property Expert
I am uniquely qualified to help buyers who need to sell a property through a short sale as I have acquired the CDPE designation (I’m A CDPE). In addition, I bought a short sale property in 2009 as my primary residence so I have a lot of experience on that side of the short sale transaction as well.
If you know of someone facing a hardship contact me via e-mail or cell phone (651-338-0355) for a confidential consultation about the options. – Contact Bill
New Short Sales Rules to Benefit Dakota County Homeowners
December 8, 2009
On November 30th the US Treasury Department laid out new guidelines that are designed to help speed up the short sale process by issuing new rules which should benefit Dakota County homeowners. This should help those homeowners that have had a hardship and are at risk for losing their home due to foreclosure.
What is a short sale?
The National Association of Realtors defines it the following way -
A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt.
What are the new rules?
The best explanation I’ve seen is the following from the NAR Realtor Magazine site -
Government Announces Short Sales Guidelines:
The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly. To qualify under these new guidelines:
- The property must be the home owner’s principal residence.
- The home owner must be delinquent on the mortgage or close to defaulting.
- The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
- The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.
Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments. Borrowers who complete a short sale under the program must be “fully released” from future liability for the debt, according to the guidelines.
Why do they need new rules?
New rules were needed because short sales are taking too long to process, they often are complex negotiations with multiple lenders who are more frequently putting up barriers to success and there continues to be roadblocks to helping consumers through the process when doing a short sale is better for the homeowners long-term credit situation.
Unfortunately, these new rules don’t actually take affect until April 5, 2010. They are scheduled to expire December 31, 2012. Lenders are encouraged to implement it earlier so hopefully the new short sale rules will become a reality for those Dakota County homeowners that need help sooner.
Additional Resources
- This press article does a good job of laying out the new announcement – Treasure sets guidance to simplify “short sales”
- Program details from the US Treasury on the new short sales & deed in lieu of foreclosure program rules – Home Affordable Foreclosure Alternatives
- A previous article I wrote showing how successful short sales were falling behind successful foreclosure sales here in the Twin Cities – Foreclosures Selling Faster Than Short Sales
As I’ve written about before, I’m a Certified Distressed Property Expert and have the processes and knowledge needed to help homeowners avoid foreclosure. If you know of someone facing a hardship contact me via e-mail or cell phone (651-338-0355) for a confidential consultation about the options.
Foreclosure Relief? I’m a CDPE – Short Sale Specialist
October 8, 2009
I spent the last 2 days becoming a Certified Distressed Property Expert at an excellent training class put on the the Distressed Property Institute. What is a CDPE?
A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.
The prospect of foreclosure can be financially and emotionally devastating, and often homeowners proceed without guidance of any kind. The developers of the CDPE Designation believe that the best course of action for a homeowner in distress is to speak with a well-informed, licensed real estate professional. They have the tools needed to help homeowners find the best solution for their situation. Often, when other options have been exhausted, CDPEs can help homeowners avoid foreclosure through the efficient execution of a short sale.
Nationally there are now 1 in 8 homeowners that are either in foreclosure or in default (missed at least 1 payment). On top of that there is a coming storm of financing that is going to drive even more homeowners into default when their higher payments hit (see chart) -
As a CDPE my goal is to save Minnesota homeowners from going through a foreclosure which can have a devastating effect on their credit and impact their ability to buy a home or even their employment for many years. By implementing CDPE processes we average an 80-90% success rate with short sales vs. the industry average of 30%.
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