In today’s real estate market a frequently asked question is, “is it better to buy a short pay or REO property with respect to “where is the best price point obtained”? 12 months ago the real estate hot spot was REO sales and short pays were considered impossible to close with only an estimated 20% of negotiated short pay transactions closing.
Most of the Southern California listing inventory is down 50% from a year ago. The Temecula Valley listing inventory is down by approximately 70% from a year ago.
Approximately 50% of all listings are short pay and the balance is divided between standard sales and REO. Standard and REO sales are the most competitively priced and most difficult to obtain and usually have multiple offers presented. Short pay listings continue to average about a 20% close ratio with accepted offers.
The key in negotiating and successfully closing a short pay offer is to know this information before making an offer:
• Market Survey, knowing current 60 day value of the subject property based on similar, same location properties
• Has the Seller sent financials to the respective mortgage holder
• Has the respective mortgage holder ordered the appraisal of the subject property
• Are there or have there been any offers presented, in process and or accepted by the existing mortgage holder.
…..Once this is obtained there is a considerably better outcome to successfully closing the transaction and usually a better price point verses the REO or standard sale. In addition there is less competition with the short pay purchase, but obviously more investigation upfront.
If you have questions feel free to call us anytime @ 951-302-7996.
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