By Charles Pickens for RealEstateAuctions.com
Foreclosures. Loan modifications. Short sales. Underwater home owners. Terms that were obscure at best just a few years ago have now become part of our everyday vernacular. Home sales have not picked up as predicted, the real estate industry remains a buyer's market with a surplus of inventory the likes we have never seen. Many homes are now offered for less than half of their original value.
What if someone told you that today’s real estate market was
thriving? That the sub-prime lending crisis was no longer an issue?
What if they went on to say that opportunity has never been greater for
the sellers of real estate to liquidate their properties at or above
asking price? You’d probably say that person was some poor real estate agent who
has finally lost it. Certainly someone who has become so desperate for
good news, they’ve decided to create their own. Interestingly enough,
there is a place where this is actually true – the real estate auction.
It is the auction process that has enabled the sellers of real estate
to regain control of the market. Imagine knowing the specific date and
time your property will sell! This heightened degree of certainty and
control is drawing the once obscure real estate auction market to the
forefront of how real estate is sold today. No longer are sellers
sitting on their hands waiting for a broker to find a “qualified buyer”
and then become engaged in incessant price haggling that may or may not
consummate in a sale.
To those in the know, auctions are not the last resort for dumping properties. That’s one of the auction myths.
Instead they are viewed as sleek, streamlined, professionally run
marketing campaigns that not only generates a wider level of interest
than traditional sales, but fierce, adrenaline-stoked competition
between buyers determined to prevail. The savvy members of the
professional real estate industry have already added this powerful
liquidation and acquisition tool to their wealth-building arsenal.
They understand that is the auction environment that drives the pricing and ultimately brings the seller the greatest return.
Indeed, the real estate culture is changing and it’s just a matter of time before the secret is out.
Charles Pickens is a Business Development Executive and Team
Leader for RealEstateAuctions.com in New York City. For more information
about New York auctions, contact Charles at 646-824-3350 or cpickens@omegaservicesgroup.com
By Charles Pickens for RealEstateAuctions.com
In a slowly recovering real estate market,
it’s been widely understood that a short sale is preferable to lenders
than going through a foreclosure proceeding. Get what you can now and
save on the expense of property maintenance, legal fees and court time.
Recently however, using new calculation models and data, there has been a
change in this strategy, leading to a new look at the foreclosure or
short sale question.
Rising home prices have been a benefit to
many homeowners, but those facing foreclosure have found that the
lending community has begun to change its approach to liquidation
strategies. It has now been found that foreclosure and the sale of the
resulting REO may provide a higher recovery on the unpaid principle
balance (UPB) than short sales, a significant change from just a few
years ago.
Let’s take a look at three methods of liquidation:
1. A sale to a third party at a foreclosure auction
2. A short sale
3. A foreclosure and subsequent sale of the REO
In
the first case, it was found that sale at a foreclosure auction
consistently resulted in a fully paid mortgage. In a short sale
scenario; by definition the lender agrees to take less than the UPB to
settle the debt. Beginning in the third quarter of 2012 lenders began to
see a higher UPB recovery rate on sales of REO than short sales. Trey
Barnes, senior VP of loan data products at Black Knight Financial
Services, who came up with this calculation process says “Of course, REO
sales have additional timelines and associated costs that impact total
losses and are not accounted for in this analysis. That
said, on average, REO properties are selling for 71 percent of the
corresponding loans’ defaulted UPB, as compared to just 65 percent for
short sales. Both recovery rates pale in comparison to third-party sales
at foreclosure auction, however, where average gross sales price is 116
percent of UPB.”
Quite clearly, this represents a change in thinking that will have a wide spread impact on the industry. At RealEstateAuctions.com / New York,
we expect seeing a decline in the “we can help prevent foreclosure”
option for distressed homeowners; instead, we anticipate an aggressive
streamlining of the foreclosure process by lenders resulting in larger
and more frequent real estate auctions.
Charles Pickens
is an Auction Executive and Team Leader for
RealEstateAuctions.com in New York City. For more information about New
York auctions, contact Charles at 646-824-3350 or cpickens@omegaservicesgroup.com.
