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2012 to be a Busy Year for Short Sale & REO Agents

by Chicago Agent

Jason Shapiro is a broker/principal at Rising Realty in Chicago.

Mortgage rates are at an all-time historic low, but one of the biggest problems facing Chicagoans is that very few people have the ability to refinance due to poor credit and negative equity in their properties. This will only mean more foreclosures and a busy year of selling distressed real estate for REO and short sale agents in the Chicagoland area.

Foreclosure activity dipped in Chicago in 2011 as well as across the nation, where overall completed foreclosures fell 24 percent nationwide to 830,000, down from 1.1 million a year earlier, according to a report from CoreLogic.  December foreclosures nationwide also declined year-over-year from 67,000 to 55,000.

The foreclosure decline comes in the context of litigation and regulation regarding robo-signing, including an expected settlement between states and the nation’s five largest banks over mortgage-servicing practices. Florida led states by far in foreclosure inventory as a percentage of all mortgages at 11.9 percent in December, though that’s down 0.1 percent from a year earlier. Illinois came in at 5.4 percent as the third highest percentage.

REO inventory, though, is starting to increase in Chicago again as banks are starting to move through the process of foreclosure again, which was halted for most of 2011 due to the robo-signing and affidavit issues in Illinois. Short sales in the Chicagoland are also on the rise, as banks would prefer to not foreclose and work with homeowners more to sell to owner-occupant-buyers rather than investors. Banks historically receive more money from short sales than foreclosing on properties and selling them as an REO.

Banks have been under closer scrutiny by the government to stabilize neighborhoods through their first-look programs as neighborhoods are being devastated with foreclosures and vacant homes, resulting in depreciating prices. Banks are also giving financial incentives to homeowners in some occasions to short sale their properties.

Some homeowners are paid as much as $40,000 by their bank to list and sell their property with the help of a short sale agent. The banks feel that they will help stabilize neighborhoods more with short sales and save their own company money by not having to foreclose, evict and spend additional market time as an REO to sell it for less money and more time.

Agents who specialize in representing banks and homeowners in distress properties are going to be very busy in 2012, as unemployment numbers and foreclosures in Chicago stay at elevated rates, in addition to the amount of people who have negative equity in their homes.

In Chicagoland, there appears to be no end in sight anytime soon to reduce the amount of properties going into foreclosure based on the mortgage analytics data comprised by LPS and CoreLogic. If you are an agent in the Chicagoland market and are not involved in selling REO properties or short sales, you better position yourself to go after this market.

Jason Shapiro is a broker/principal at Rising Realty in Chicago; he can be reached at:

Office: 773.897.0614
Fax: 773.395.9553
Cell: 847.910.0567
www.risingrealty.com

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