As strange as it may seem in this seller’s market, there are still short sales and foreclosures lingering on the edge of our swiftly moving market. It seems as if some sellers are still laboring under the cost of homeownership. In addition, some lenders have held back properties that were acquired after the market crash in 2009 from the active sales market. The foreclosures for this year, according to USA Today, shows Maryland was the second highest number for foreclosures in the country. In March 2017, one out of every 820 housing units were foreclosed on in Maryland.
Therefore the slow drip of foreclosure properties continues, with a short sale also appearing from time to time. The general conclusion regarding the foreclosures; the lenders are slowly introducing them into the market to help control, and prevent, another down turn in the market (a downturn that foreclosures and short sales could cause with their lower sales prices). AOL finance reports; (this is) “what’s known as the “shadow REO” inventory: repossessed homes across the country that banks or investors often purposely keep off the market. The practice isn’t a secret, and refraining from dumping a large inventory of foreclosures on the market helps to keep home prices from crashing.”
Regarding short sales, even though the market has improved greatly (after the market crash of 2009), many properties have not yet reached their original value (the value attained just before the drop). This scenario leaves the seller with few options, if they are unable to clear their mortgage with the amount of funds recognized in a sale of their property.
The short sale process is a method to provide relief for financially stressed sellers, especially those sellers that bought at the height of the sales market and are upside down, with their mortgage being more than the value of the property. In a short sale, the process is designed so sellers are forgiven the difference between the sales price of a property and the amount still owed on the mortgage. Sellers are usually given a 1099 from the lender for that difference. Although a short sale will cause a blemish on the seller’s credit, it isn’t as harmful as a foreclosure would be.
For buyers, Amazing possibilities exist with short sales and foreclosures alike, since a property may be purchased at a drastically reduced price, frequently way below market value. Keep in mind, at times, properties owned by stressed sellers may require work, from minor TLC requirements to larger issues that need to be addressed.
Currently there are five short sales, 33 bank owned properties, six rent-to-own properties, eight government properties and three pre-foreclosure listings for sale in Ocean City alone.
In Worcester County (outside of Ocean City) there are 13 properties on the market as short sales, 30 bank owned (foreclosure) properties available, one rent to own, four properties that are government owned and one is to be auctioned.
Although the number of short sales, and foreclosures, have dwindled between 2011 and today, there are still some great deals to be found. You may want to discuss the value of these properties and possible future acquisitions with your local REALTOR