The signs seem to be pointing that way. The current administration has been flailing away on many areas of the economy and one of the most glaring weak areas have been the loan modification plans such as the Home Affordable Modification Plan (HAMP) which has seen less than 10% of individuals successfully modify their loans and a whopping 40 – 50% of those people are re-defaulting after receiving a modification.
To their credit however, the White House along with the Treasury Department, have recognized the need for a more orderly transfer of homes and avoid foreclosure. Treasury has been pushing hard for banks to transfer properties via short sales and deed-in-lieu rather than taking homes back in huge numbers.
The next program on the horizon is called the Home Affordable Foreclosure Alternatives Program (HAFA) which will become active this April. This program is a supplement to the previously mentioned HAMP program. Any bank who is participating in HAMP must also participate in HAFA. The new program encourages banks to approve short sales on a faster timeline. The average short sale file now takes 4 months to approve. The actual time period is often longer as buyers frequently walk out before an approval for the sale is obtained, forcing the seller to find another buyer and start the process all over. A shorter approval process will encourage buyers to stay the course and increase the closing percentages for short sales.
The final set of indicators I have seen are changes within the real estate industry. Banks are cutting back dramatically on their REO staffs. These departments handle the liquidation of foreclosed properties. On my end of the business, residential real estate, agents are also gearing up for a switch from foreclosure to short sale transactions. Short sale education classes are packed, REO listing agents have been cutting their staffs and many agents are now looking for a new place to land within the industry.
Our team is expecting our current inventory to double and is actually adding staff to accommodate the business. This is a far cry from last year when most Las Vegas real estate agents cringed at the very thought of getting involved in a short sale. I have been listing short sales almost exclusively for a year in anticipation of what is now becoming a reality.
If you are considering a short sale and have questions, I can be reached at 702-376-0088.
Paul Rowe is the listing team leader for the Sena Team at North American Realty of Nevada. You may reach the Team Sena at 702-376-0088. They offer representation for buyers, sellers and operate a full service property management division.