Coming from an analytical background, I find myself digging through the local real estate statistics for San Jose and Santa Clara County into the wee hours of the morning more times than I should admit. I am always in search of a trend whether it is about one of the neighborhoods I work for or for an entire city like San Jose. Lately I have been digging through the short sale numbers in order to get a better handle on how these homes are affecting the average sales price, closed contracts, and days on market (DOM).
Now as most of us know, these short sale homes are not the easiest to close. I pulled one zip that I know is heavy with short sales and the average days in escrow was about 52 days. For the 4 troubled zip codes I researched, there was an average of 14% of the listings with the term short sale attached to the agent remarks.
The more interesting statistic I found was regarding the average price per square foot. I looked at sold and active listings over the last 6 months and I found that if there was a deal on a short sale it was only about $25/square foot compared to similar homes in the neighborhood that were not in a short sale situation. Of course, in California that $25/square foot is the difference between a $600,000 home and a $637,000 home. But what I was surprised to find was that in most cases the short sale homes were actually selling at a higher price per square foot then the non-short sale homes in the same neighborhood with comparable bedrooms and total square feet. I found on average the difference was anywhere from $10 more per square foot to $35 more per square foot.
In the end, when I looked up at the clock and it was getting close to 2 a.m. and I realized that I had spent a lot of time proving to myself something I think a lot of folks in this business already know. The banks are not motivated sellers. They are not motivated to accept the request for a short sale without blood on the hardship letter. They are not motivated to review the offer(s) placed on the home in its “as-is” condition in a timely manner. And they certainly are not motivated enough to offer a true deal on a distressed property via the price per square foot average.
I also realized that even in a “buyer’s” market, the due diligence necessary to make sure my client’s get the best deal is worth red eyes and lots of coffee the next day. I for one am motivated to help my clients through this market and make sure they get the best deal on whatever house they fall in love with. Back to the stats I go.
Here is another great post on short sales by Frank Llosa.