If you blink as a real estate investor, you are sure to miss the next investing craze. The most recent trend was faster than expected, as the life of short sales appear to be coming to an end. Much like foreclosures and 100% mortgage financing opportunities, the short sale had a great run and many investors thrived on them for years. However, recent numbers indicate the window is closing for these properties, if it has not closed already. The total number of short sales is down 60% from last year. With increased property equity and decreased foreclosures, this appears to be a train that will not be slowing down any time soon.
As an ironic twist, when the short sale process seemed to be heading in the right direction, it rapidly began to slow down unexpectedly. The major drawback with the short sale process was the lengthy amount of time it took to get the property from listed to closed. Lender guidelines and software did a good job of speeding up the process, but now it appears to be for naught. Between government programs such as HARP & HAMP, increased property values and decreased foreclosures, the need to do a short sale has come down.
There are still some markets and some individual properties where a short sale can make sense, but as a whole, the short sale is on the quick decline. Those investors who cashed in when the market was flooded are now seeing large equity gains and are considering cashing out and reinvesting in new properties. With foreclosed property sales down as well, it will be interesting to see what the next turn in the market will be. It is becoming clearer every day that we are witnessing the end of the short sale run.