Miss Out On A Fannie Mae Short Sale? Just Wait Two Weeks!
Over the past two months, I've noticed a trend with failed Fannie Mae short sales in the Arizona pre foreclosure market. We've had at least 5 cases where our buyers lost short sales because Fannie refused to extend the foreclosure dates. In all of these cases, these failed short sales hit the market as REO listings within 10 DAYS of the foreclosure auction date. In all cases, the asking price was 10-20% lower than what we had offered on the short sales. Were my clients happy to pay less for the home? Absolutely. Was I happy to see them get a better deal? You bet! After all, our job is to help our buyers get the best possible deal. Right?
On the other hand, the majority of my business revolves around helping sellers stop foreclosure. When I see this type of behavior from a government-run entity, it makes my blood boil. Especially when this government-run entity (Fannie Mae) stands up in front of the cameras on a regular basis, preaching about how much it is trying to help homeowners.
For those of you that have read my blogs in the past, you know that I'm a "numbers guy". In keeping with my reputation, I decided to do a very non-scientific study to see if my "hunch" was right. I decided to take all of the homes that were lost at the foreclosure auction in the metro-Phoenix market from 8/15/2010-9/15/2010, determine how many of them had been listed since their auction date, and how many days had passed between the auction date and the day they were listed.
I was shocked at the results.
Of the 25 homes that made the list, 22 were owned by Fannie Mae. The average Fannie Mae foreclosure was on the market within 13 days of the foreclosure date!
Of the other 3 homes that made the list, one was a VA, one was FHA, and one was a Wells Fargo foreclosure. So, only 1 private lender, vs 24 GSE's. Hmmmm...
About 1/3 of the Fannie Mae foreclosures were failed short sales.
Why does any of this matter? Number one, I think it's great that Fannie is not holding back inventory, and creating the "phantom inventory" that we all hear about.
What makes me scratch my head? As someone who deals primarily in the Arizona pre foreclosure market, I'm very concerned about those folks who are trying to "do the right thing", and short sell their home. With Fannie's new stance on not allowing foreclosure dates to be extended, and the speed at which they can bring a foreclosure to market (13 days vs waiting months to get a short sale even considered), it makes me wonder if Fannie actually prefers to foreclose versus working with homeowners.
While getting a home on the market as quickly as possible is definitely the financially prudent thing to do, it saddens me to see the values in the neighborhood drop even more when another under-priced Fannie REO hits the market. Obviously, Fannie could care less about this part of the equation.
Is anyone else seeing this in their marketplace? Does anyone have any ideas as to why they are doing it?
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Bob Hertzog
Summit Home Consultants
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Copyright © By Bob Hertzog 2010 *Miss Out On A Fannie Mae Short Sale? Just Wait Two Weeks!*