MYRTLE BEACH — The good news in Grand Strand real estate is, to some at least, also the bad news.
New listings for short sales each month have overtaken those for foreclosures since last year, Realtors say, a move that along with a better attitude from banks toward short sales opens opportunities for both buyers and sellers. But at the same time, others say, the prevalence of short sales and foreclosures still hold down prices of non-distressed properties.
Short sales and foreclosures lower values for the homes surrounding them, said Tom Maeser, market analyst for the Coastal Carolinas Association of Realtors, because they are now used as the major factor in setting a home’s value, which affects other homes in the same neighborhood. In the past, he said, distressed sales were looked at as a long-term trend kind of item that would be considered with other things in setting value.
Be that as it may, a number of Grand Strand Realtors now advertise themselves as short sales specialists, extolling the virtues of short sales to sellers as well as buyers.
“Agents should be drooling and foaming at the mouth,” said Shawn Bowman of Real Estate Buy the Coast in North Myrtle Beach.
Banks are friendlier to the idea of short sales than they have been in past years, which he sees as a prime reason there are now 40 to 50 short sales and 20 to 30 foreclosures coming on the market each month, figures that would have been reversed a year ago. Bowman said that using his own customer database with thousands of names, he is closing 15 to 20 short sales a week.
Short sales totaled 29 percent of all Horry County home sales in November, Maeser said. Nationally, short sales rose 17 percent in the third quarter from the year before, according to RealtyTrac, and 22 percent in South Carolina.
Some attributed the increase in short sales late last year to uncertainty about federal taxes on the difference between the short sale price and the total mortgage. Congress extended the moratorium on the tax for 2013 as part of the fiscal cliff deal, a move that Bowman and other Realtors see as a positive sign.
The chute is greased further because banks want to clear bad debt from their books and now suggest short sales to borrowers who are having trouble making regular mortgage payments, said Greg Harrelson of Century 21 The Harrelson Group.
He said the federal government requires banks to keep double the deposits on hand to cover bad debts, and banks want to free up that money now to take advantage of an improving economy.
Harrelson said banks’ short sale requirements used to change all the time and that it was not unusual to fax hundreds of pages of short sale loan documents to a bank only to have it come back a month later to say that this or that piece of information was still needed.
But now Realtors can e-mail the information to banks, which Harrelson said speeds up many short sales by a month.
“Three years ago, (the short sales process) was a nightmare,” Harrelson said.
Harrelson said his office now gets numerous calls seeking information about the short sale process and a growing number of them are because callers have been urged to seek that route by their bankers.
“I’m more of a doctor than a typical Realtor,” Harrelson described how he must explore each seller’s loan and payment condition to see which sales option is best for each situation. “I ask questions first.”
The bright spot for the future of Grand Strand real estate is new construction, Maeser said. A newly-built home can command a price 15 percent above a comparable short sale, and Harrelson said that some buyers – for obvious reasons – will pay the extra to buy a new rather than a used home.
But new home sales accounted for just 5 percent of Harrelson’s business last year, he said, while short sales and foreclosures each racked up 15 percent. Existing home sales at his office far outdistanced the others with 65 percent of his business.
“New construction is the new competition,” Harrelson said.
And, according to Bowman, sellers and buyers can figure prices for existing homes will rise when they see prices asked for new homes climb.
Contact STEVE JONES at 444-1765.