You probably heard it in the news. A large percentage of Columbus OH homes for sale are listed as short sales. Usually, this means that the seller is behind in mortgage payments and may be facing foreclosure.
Short sales take a long time, and they may not be the best choice if you are in a hurry. Many short sale listings never receive a purchase offer that is acceptable to the lender. You probably wonder what happens to these Columbus condos and homes?
If the short sale does not go through, the bank will usually complete the foreclosure and takes ownership of the house. In the case of FHA loans the bank turns these homes over to the federal government and they become HUD homes.
Many short sales fail, because banks do not accept reasonable offers. They keep holding out for a better buyer and delay the approval for weeks and months. Does this strategy make any sense? Should lenders accept the first reasonable offer just to get rid of a house instead of completing the foreclosure and selling the house as an REO?
I found an answer to this question just recently. Two Columbus houses, which I listed as short sales in 2008, came back on the market as HUD homes a couple weeks ago. Both of them are now in contract. Both short sales failed, because the lenders did not take my advice as a Columbus real estate agent familiar with the local market conditions and would not accept reasonable offers.
Let’s take a closer look at these 2 suburban Columbus OH homes for sale:
The first home at 1179 Weeping Willow Dr in Blacklick OH was initially sold by the builder for $187,400. The bank requested that I list it for $160,000, but I did not receive any offers at that price. After it became a HUD home, it was re-appraised for $150,000, and HUD accepted a purchase offer of $115,463 (net to HUD $106,400).
The total loss was $81,000.
The other house at 7313 Oliver Winchester Dr in Canal Winchester OH was built for $176,825. I listed it as a short sale for $139,900. Due to the lack of offers, this house also became a HUD home, and was reappraised at $112,000 and sold for $117,800 (net to HUD $109,266).
The total loss was $67,559.
As both of these homes were purchased from the builder with FHA loans, it is fair to assume that they were 100% leveraged. So the loan amounts were approximately $187K for Weeping Willow and $176K for Oliver Winchester. This results in a loss of $81K (43% of loan amount) for Weeping Willow and a loss of $67K (38% of loan amount) for Oliver Winchester.
Hopefully, some lenders will read this story. The fact is, that banks loose big time, if they do not accept short sale offers and foreclose on the house. In both of these cases the lenders would have lost less money accepting a short sale offer than foreclosing on the home owner. On top of it, they had to pay attorney fees, property maintenance costs and it took them more than 12 months before they could actually sell these homes.
Thanks for reading the susannenovak.com Blog!
Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Real Estate Agent helping First Time Buyers.
(614) 975-9650