Why do so Few Orange County Short Sales Close Compared to the Number in Escrow?
It’s no surprise that there are a lot of homeowners who are upside down (owe more than their home is worth) in their homes right now.
- Median home values in Orange County are down 40% from just a couple of years ago.
- Many people bought their homes with little or no money down.
- 6 of 10 Orange County homes purchased in 2006 are upside down
The result, along with the economic troubles, has been that many homeowners have the need to sell their homes but cannot pay off the loans because of the current value of their home. This results in a short sale.
For more information on Orange County short sales and foreclosure options, please see Short Sales and Foreclosures in Orange County.
What is interesting to me are the number of homes in escrow that are short sales compared to the number of homes that have sold in a month that are closed short sales.
In examining this, I looked at Huntington Beach.
In November:
- 126 homes sold in Huntington Beach, 16 were closed short sales.
- Of the 126, 15 were bank owned foreclosures.
None of this may be very surprising, but what I find interesting is the comparison to homes in escrow (a buyer and seller have entered into a contract to buy/sell the home).
During this same time:
- 306 homes in escrow.
- 155, or more than half were short sales.
- Only 18 of the homes in escrow were bank owned foreclosures.
This is not a one month oddity, I see similar numbers going back over the past several months.
In looking at this, it appears that a bank owned foreclosure is likely to close escrow, while only a very small percentage of the short sales will close.
Why is this? There are likely several reasons:
- It can take months for a short sale to be approved by the bank and close, so there may be a glut in escrow.
- A bank may not approve a short sale, so it never closes.
- The buyer may become tired of waiting for a bank approval so the escrow doesn’t close.
- A bank owned home is truly “for sale.” The bank wants to get it closed, and it does not require a third party to agree to the sale.
Given this, should you consider buying or selling an Orange County short sale?
For sellers whether or not short selling your Orange County home makes sense depends upon your individual situation.
For buyers, buying an Orange County short sale may mean getting the right home at the right price, but the buyer needs to be willing and able to be patient. If you have to move in the next 30 to 60 days, a short sale is probably not the right home for you.
If you would like to receive my e-book with more information on short sales and foreclosures, please e-mail Me!
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About the author: Christine Donovan is a California Residential Real Estate Broker with experience in assisting clients buy and sell residential real estate.
Are you upside down in your home? Do you owe more on your Orange County home than it’s worth, and you don’t know what to do? Are you concerned about making your mortgage payment? Contact me at christine@donovanblatt.com or 714-319-9751 to discuss your options.
Want to buy a home or to list your property for sale in Newport Beach, Costa Mesa, Huntington Beach or Orange County? Contact me at christine@donovanblatt.com or 714-319-9751 to learn about our system which will make your buying and selling experience easier.
Disclaimer: All information in this blog is deemed reliable but is subject to change at any time and is not guaranteed to be accurate nor are there any warantees either express or implied. This blog is not intended to offer any legal, tax or other advice.
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Copyright © 2009 by Christine Donovan, All Rights Reserved. Why do so Few Orange County Short Sales Close Compared to the Number in Escrow?