The San Diego housing market has been in a correction for the last 5 years. Many homeowners are waiting for San Diego property values to come back to pre 2005. Unfortunately, that is not happening, and it is not surprising, considering the changes in home financing, local unemployment and buyers’ lack of confidence in the market.
Interesting enough, inventories for San Diego homes and condos are low. Traditionally low inventory meant higher prices, but in today’s environment not only we no longer have stated income financing but any “great deal” is purchased by investors paying cash, leaving traditional residential homeowners out of luck.
International buyers relocating or looking for a second home are finding homes in San Diego. Anywhere from Mexico, Canada, and other countries had been relocating to the beautiful San Diego coastal communities.
The most popular destinations are Coronado, Downtown San Diego, and north county coastal cities such Encinitas, La Jolla, Del Mar, and Solana Beach.
Short Sales account for more than 50% of today’s inventory, and buyers don’t know what to expect from these listings.
When a Short Sale is listed 5% to 10% lower than a traditional or equity listings, buyers feel they can’t pass on buying at a discount. The reality check comes when they realize they don’t have the stomach to go trough the Short Sale process.
Should you submit an offer to a Short Sale listing? I personally think there are good opportunities in these listings, but only if the you understands the following:
- Don’t expect a quick closing. The lender (lien holder) must approve your offer, this process may take between 3 to 6 months and at the end of a long wait the sale might not be approved.
- Be ready to make concessions. As a buyer of a Short Sale you need to be ready to pay or contribute to pay for seller’s closing cost, reports, and inspections that are customarily a seller’s responsibility.
- Patience, patience and patience! In a Short Sale there are many parties involved, and each with their own agenda. Be prepare and not surprised when the close of escrow date gets extend multiple times thru the process.
On top of this, even when the lien holder approves the sale, the seller might not like the terms of the approval and can cancel the transaction.
With a success rate at less than 60% any buyer will think twice before committing to a Short Sale. But, if you understand these points and don’t mind the commitment need from you, then you are a good candidate to buy a Short Sale.