Timeline Requirements to Support Continued Short Sale Growth

With ""new deadline requirements"":http://dsnews.comarticles/fannie-and-freddie-set-timeline-requirements-for-short-sales-2012-04-17 set by the ""Federal Housing Finance Agency"":http://www.fhfa.gov/ (FHFA) looming on the horizon, short sales are expected to increase after an already active first quarter.

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According to ""RealtyTrac’s Q1 2012 U.S. Foreclosure Sales Report"":http://www.realtytrac.com/content/foreclosure-market-report/q1-2012-us-foreclosure-sales-report-7213, pre-foreclosure sales (most often short sales) reached their highest level in the first quarter of 2012 than they’ve seen since 2009. The report went on to show that pre-foreclosure sales accounted for 12 percent of all sales during the first quarter of 2012, up from 10 percent in Q4 2011 and 9 percent in Q1 2011. Third parties purchased a total of 109,521 pre-foreclosure homes in the quarter, an increase of 16 percent from the previous quarter and 25 percent year-over-year.

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Pre-foreclosure homes that sold in 2012’s first quarter took an average of 306 days to sell after starting the foreclosure process, a decrease from 308 days in the previous quarter but up from 256 days in the first quarter of 2011. The FHFA issued guidelines in April that will require servicers to make a decision within 30-60 days of receiving an offer on a property under a short sale program. The new deadline requirements, which go into effect June 15, comes as a welcome change to buyers and sellers who felt that servicers were taking too long to complete sales.

The report also showed that pre-foreclosure sales prices have been falling. In first-quarter 2012, the average sales price of a pre-foreclosure home was $175,461, down 4 percent from the previous quarter and 10 percent from first-quarter 2011. This price was the lowest quarterly average price in the history of the report, which goes back to the first quarter of 2005. It was also 21 percent below the average price of a non-foreclosure home, up from a 19 percent discount in Q4 2011 and a 16 percent discount in Q1 2011.

“Foreclosure-related sales picked up in the first quarter, particularly pre-foreclosure sales where a distressed homeowner is selling to avoid foreclosureâ€"typically via short sale,” said RealtyTrac CEO Brandon Moore. “These pre-foreclosure sales hit a three-year high in the first quarter even as the average pre-foreclosure sales price dropped to a record low for our report. Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions.”