Steamboat Springs The number of distressed single-family homes that changed hands through the short-sale process more than doubled here to 29 in 2011 from a dozen in 2010.
The growth in short sales came against the background of a similar, but less dramatic, increase in properties that sold through foreclosure. And the totals in Routt County are apt to be even greater: The research done by Colorado Group Realty for this article relied on the Steamboat Springs Multiple Listing Service for its data and reflects only sales in which a Realtor was involved.
Short sales are processes through which homeowners avoid the foreclosure process by negotiating with lending institutions to accept a sale for less than the outstanding principal on the owners’ mortgage. The banks can justify sacrificing on the sale price because of the money saved in legal fees, for example, by avoiding the formal foreclosure process. And sellers are able to restore their credit ratings faster after a short sale than they would after a foreclosure, said Realtor Scott Wither, a senior partner with Colorado Group Realty.
“Short sales and bank-owned homes are definitely a significant part of the market now,” Wither said. “It’s partly because we have a large number of second homes and investment properties. It’s a niche market (representing almost 9 percent of total dollar volume in 2011), but it’s a big neon sign for buyers looking for price reductions,” Wither said.
The number of bank-owned sales here grew from 89 with a combined value of $37.8 million in 2010 to 165 with a value of $43.5 million in 2011. Bank-owned sales represented 22.8 percent of Multiple Listing Service unit volume in 2011.
Wither said well-intentioned people who are struggling to make the mortgage payments on their principal residence and an investment property plus HOA dues on the latter often are forced to make a decision. Faced with the reality that large institutional banks holding the note on their vacation home are unwilling to restructure the original mortgage and that government programs to help people who are underwater in their real estate are limited to primary residences, people in those situations are most apt to pursue an exit strategy on their second home, Wither said.
“They don’t want to do it, but it’s survival,” he said.
Colorado Group Realtor Ron Wendler, one of four Colorado Group Realtors who recently completed advanced training in foreclosure avoidance with an emphasis on short sales, said the short sale process can be difficult with no promise of success. But many property owners, as well as determined buyers, think it’s worth the effort.
He represented the buyer this year in a short sale that stretched throughout seven months and was complicated by the presence of first and second mortgages on the property. That more than doubled the work of negotiating on the contract price with the lenders. The seller filing for bankruptcy in mid-process further complicated the process.
Short sales largely are invisible to the public compared with more typical foreclosure sales. Transaction records at the Routt County Clerk and Recorder’s Office do not reflect whether a recent transaction was the result of a short sale. However, bank-owned sales readily are evident because the county reports the name of the sellers and buyers in its online database.
Wither reported that Multiple Listing Service short sales totaled 70 this year when building lots, condos and townhomes were added to single-family home sales. That compares with the 165 bank-owned sales in 2011. Combined Multiple Listing Service distressed property sales accounted for 236, or 32.6 percent, of the 724 transactions that went through the Multiple Listing Service last year.
In terms of dollar volume, short sales accounted for
$29.95 million, or 8.7 percent, of the total $334.7 million in Multiple Listing Service dollar volume. Bank-owned sales reached $43.5 million, or 22.8 percent, of the total dollar volume.
Short sales accounted for 6.4 percent of Multiple Listing Service dollar volume in 2010, and bank sales were almost 15 percent.
Local Realtors focusing on a niche market
Colorado Group Realty announced this week that Realtors Lee Findell, Randall Hannaway, Sue Stempel and Ron Wendler have completed training in assisting their clients with short sales.
Short sales are a form of foreclosure avoidance, allowing property owners to negotiate with the holder of their mortgage to accept a sale for less than the principal balance of the note.
Yampa Valley Data partners projected this week that the incidence of foreclosures here is less than half the national and state averages and far lower than what has been experienced in some Western Slope counties.
As of November 2011, one in 579 homes nationally and one in 575 in Colorado was in foreclosure proceedings. In comparison, the numbers were one in 1,390 in Routt County.
The situation is more severe in nearby Eagle County (one in 348) and Garfield County (one in 253). Summit County’s foreclosure rate is more comparable to Routt at one in 1,035.
Other Colorado Group Realtors who previously have completed training in handling the sale of distressed properties include Eliese Pivarnik and Martin Dragnev.
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com