Short Sales & Foreclosures in Plymouth and Maple Grove
19 May 2008 by Aaron Dickinson - Edina Realty
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I took a few hours Sunday to review short sale and foreclosure sales in Plymouth and Maple Grove during the last 10 months and found some interesting information. Before I explain what I found, I want to explain what I looked at:
- Homes that were clearly a short sale OR a foreclosed, bank owned home. This meant I only searched the terms like “short sale” and “bank owned” or “REO” and not all the other terms that can sometimes be ambiguous. This gave me a short list to work from, but it was as close to perfect accuracy as could be hoped for.
- I looked back through 10 months of sales
- The only sales I considered for comparison were where the home was previously purchased since 2004 and previously sold for more than it did this time. This assures that I’m actually looking at home sales that are able to give me a measurable change from sale to sale.
What I found was quite intriguing but given the lower incidence of foreclosures and short sales in these communities and the very short list of terms I was using, this is based off of 31 confirmed sales, it will have some margin of error:
- Short sales sold on average for 16.4% less than they were purchased for by the most recent homeowner.
- Foreclosed homes sold for 23.4% less than they were purchased for by the most recent homeowner.
- Consequently, it can be seen that banks are well-served by selling homes via short sale in lieu of acquiring the properties through the foreclosure process… to the tune of 7% higher average sales prices AND thousands less in legal fees and holding costs.
- Since this is an apples-to-apples comparison of specific sales, this isn’t a generalization of data.
Each community has different dynamics in them and I picked on Plymouth and Maple Grove for their similarities in housing and location. The numbers will be different in other communities but I think you’ll find the same trend: short sale listings sell for more of their original value than foreclosure listings. They do this because most of the time a short sale is in better physical condition and better maintained (since there is still an active owner) than foreclosure properties. Further, things like a completed Sellers Disclosure and working utilities help put a buyer’s concerns at ease and therefore they’re willing to pay more for a better product.
One Response to “Short Sales & Foreclosures in Plymouth and Maple Grove”
June 20th, 2008 at 2:03 am
[...] a buyer’s offer on a defaulted borrower’s house… which more times than not is a far better return on their investment than letting it go through foreclosure. The buyers willing to sit on the housing market sidelines for MONTHS while they wait for an [...]