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Best Lenders and Servicers to Buy Short Sales From

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This is the fifth and final article in a series spotlighting short sale trends in early 2012, which seem to indicate that short sale volume is on the rise while short sale prices are trending lower — a good mix  for prospective buyers and investors. This series is largely based on a short sale reportissued by RealtyTrac for a special live broadcast hosted by the Charfen Institute on April 19. Download the full RealtyTrac report.

Among the nation’s largest lenders and mortgage servicers, some are better than others when it comes to buying a short sale.

There are several ways to measure which lenders are best to buy short sales from: sales volume, average discount and average time to sell. We’ll look at the top performing  lenders in each of these categories based on January 2012 foreclosure sales data.

1. Short Sale Volume & Trend

When it comes to sheer volume of short sales, Bank of America is the clear leader, with more than 5,000 pre-foreclosure sales — typically short sales — in January alone. JPMorgan Chase and WellsFargo came in second and third, with just under 3,000 each.

We also looked at which lenders and servicers registered the biggest increases in short sale volume in January compared to a year ago. That list was a bit more unpredictable, with PNC Financial Group Inc posting a 140 percent increase in completed short sales — the biggest increase among large lenders and servicers. Combined, the three government entities of Fannie Mae, Freddie Mac and Federal Housing Administration (FHA) posted a 120 percent increase in short sales, while Ally Financial (formerly GMAC) posted a increase of more than 60 percent.

2. Short Sale Prices

While it’s important to know which lenders and servicers are approving short sales in the greatest volume, probably more important to most buyers and investors is the average price they can get on a short sale.

The three government entities combined (Fannie, Freddie and FHA) documented the lowest average pre-foreclosure sales price in January, slightly less than $130,000). Deutsche Bank had the second lowest average price for approved short sales, $132,996, and Sun Trust Banks, Inc., had the third lowest average short sale price, $144,024.

3. Short Sale Time to Sell

When it comes to identifying the best lenders and servicers to buy short sales from, the last piece of the puzzle is how long it takes to purchase a pre-foreclosure property. In the last few years, one of the biggest critiques of short sales is that they are not short at all, often frustrating the buyers and sellers involved.

On this measure, the three government entities won out again, averaging less than 200 days from the time a property entered the foreclosure process to when the pre-foreclosure sale was closed. Next closest was Ally Financial, with an average of 321 days, followed by PNC Financial Group Inc., with an average of 353 days.

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