Short Sale Stigma Surfacing?

July 24, 2013

In markets with high foreclosure rates, a short sale stigma may exist, and short sales may not be as sought among home buyers. Brokers may be at an advantage if they state in the listing that the nondistressed home they’re selling is “not a short sale,” suggests a new study, which evaluated 5,000 home sales in Boca Raton, Fla. 

Homes listed as “not short sales” sold for 2 to 5 percent more than nondistressed homes that did not state that. Homes listed as “not a short sale” also sold faster, selling about 10 to 15 percent faster than other similar properties, according to the study’s author Ken H. Johnson, an associate professor at the Tibor and Sheila Hollo School of Real Estate at Florida International University in Miami.

"In some areas, buyers are probably starting to believe that short sales mean a big hassle because they've heard horror stories about waiting months for one or more banks to sign off on the deal," Johnson says.

Johnson notes that the study’s findings speak to that particular local market in Boca Raton, “but I think you can extrapolate to other areas where we've seen a lot of distressed properties and foreclosures in the last few years," says Johnson. "What we found is that, in those affected areas, there is a short sale stigma."

Source: “When ‘Not a Short Sale’ Is a Selling Point,” (July 2013)

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