I spent much of this week in Atlanta, which is currently one of the worst housing markets in the nation. Atlanta home prices are down 17 percent annually, according to the S&P/Case-Shiller Home Price Index, thanks to a glut of distressed properties.
Foreclosures are plentiful in Atlanta, and as in other highly distressed markets, investors are swooping in, some buying in bulk, to take advantage of the hot rental market. Another new trend helping to alleviate all the distress is short sales.
Short sales (selling the home for less than the value of the loan) are rising across the nation, and while they have yet to overtake foreclosure numbers in Atlanta, they are in fact up 120 percent from a year ago, according to RealtyTrac.
Knowing all this, I searched for a short sale specialist, and found Ben Hirsh, of Hirsh Real Estate Specialists. He does much of his work in foreclosure sales and has a contract with Fannie Mae, but lately short sales have been a growing part of his business.
“The short sale market is overtaking the REO (bank-owned) market,” says Hirsh, who still expects to sell at least 300 foreclosed properties this year. He notes a greater willingness among real estate agents, thanks to a greater commitment by banks to expedite the once-lengthy process. Fannie Mae and Freddie Mac just last month announced new rules requiring them to answer short-sale requests within thirty days. Hirsh is skeptical that that will happen:
“The banks can make all the rules they want, but the banks are too large to be that nimble. And you can’t really blame them. They have millions of assets all around the country. You expect them to turn around in 30 days and give an answer on whether they are going to forgive the money you owe them? I wish that would happen in 30 days, but that’s my dream world.”
Hirsh did say, however, that getting approved for a short sale, while time-consuming, does not require much hardship, if any. That struck me as strange, since short sales are supposed to be a foreclosure alternative. The nation’s five largest banks get credit for doing short sales as foreclosure alternatives in the $25 billion mortgage servicing settlement they recently signed.