Interest at an all time low
First time homebuyer interest in short sale listings has dropped to the lowest level since Campbell/Inside Mortgage HousingPulse Tracking Survey began reporting, citing delays in the short sale process as the most damaging to interest. In August, the study found that 40 percent of short sale transactions were made by first time buyers, the third month in a row in decline, down double digits from one of its highest points in November 2009, just prior to the first and original expiration of the first time buyer tax credit.
“While mortgage servicers are certainly not blameless, these delays are often the result of poorly submitted paperwork,” Erik Wind, co-founder of ShortSaleSpeedway told NationalMortgageProfessional.com. “When a buyer works with organized professionals who know how to negotiate a short sale and submit the correct paperwork, their expectation is better managed and the processing time is often shorter than the norm.”
Could buyers be complicating the entire process?
The study found that with a nearly 30 percent price break on short sales, first time buyers felt the average 17 weeks in process was worth it. With short sales accounting for 17 percent of purchases made in August, and buyers putting in offers on multiple properties intending to close on only one, could the complications associated with short sales be dissuading first time homebuyers and complicating the entire process?
“If we could get banks to move faster on approving short sales—especially where first-time homebuyers are involved—I am certain we can consume more inventory in a shorter period of time,” said Wind. “The real estate market has many headwinds, but those buyers who are out there now are committed to buying a home and want to take advantage of the current interest rate environment. They want to buy and they want to close quickly.”