A month before The Wall Street Journal coined the term “boomerang” buyers in an article earlier this week, agent David Colbeth of Seattle identified this burgeoning trend in the September issue of RealtyTrac’s Foreclosure News Report newsletter.
Colbeth, broker/owner with the Life Point Real Estate Team in Pierce County, said he’s now working with buyers who sold their homes via short sale two to three years ago or were foreclosed on in the last few years.
“They already know the value of home ownership. They just made this big mistake at the top of the market,” he said, adding that even short sellers he’s working with now are looking down the road a few years and eager to become homeowners once again. “This is a career for me, so that’s a client in three years.”
Colbeth, who has been a real estate investor since 1995 and became a real estate agent in 2007, said this new breed of buyers fresh off probation is helping to create strong demand in the Seattle market, even as a slowdown in foreclosure activity last year and earlier this year shrunk the inventory of available foreclosed homes for sale.
He blames the shortage of foreclosure inventory — and the resulting multiple-offer scenarios that are driving up prices — on a Washington state foreclosure law that took effect in July 2011. The law allows homeowners facing foreclosure to request mediation with their lender to explore alternatives that will help them avoid foreclosure.
“I kind of predicted that we would have significant drops of inventory this year, and we have,” said Colbeth, who has been a real estate investor since 1995 and became a real estate agent in 2007.
In addition to rising home prices in many neighborhoods, a boom in new home building is another side effect of the foreclosure inventory shortage, according to Colbeth.
“Housing starts are going through the roof,” he said.Short Sales Flying off the ShelfThe new law, which makes it tougher to foreclose, along with strong demand has helped convince lenders to sell distressed homes early and often, according to Nova Shank, a broker with Keller Williams Greater Seattle.
“Short sales are just flying off the shelf. It makes it that much more desirable to do short sales,” said Shank, who also works with attorneys on short sale negotiations. “(Banks) don’t want REOs … Banks are paying some of my clients eight to 10 thousand (dollars) to do a short sale. We’ve never seen that before.”
RealtyTrac data reflects the recent surge in short sales that Shank is seeing, with pre-foreclosure sales — typically short sales — jumping to a nearly three-year high in the third quarter of 2011. Those pre-foreclosure sales have dropped in the last two quarters, but short sales happening before the foreclosure process even starts were up 39 percent in the first five months of 2012 compared to the same time period in 2011, according to RealtyTrac data.
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