We have been told that banks and servicers are now using short-sales, instead of foreclosures, as their primary defaulter-disposal method.

It appears that the conversion is well underway in San Diego County – here are the number of residential distressed-sales and average pricing for the six months between April 1st and Sept. 30th:

San Diego Co. 2011 2012 % Chg.
REO Sales, # 3,778 2,381 -37%
REO Avg. $/sf $178/sf $184/sf +3%
Short Sales, # 3,465 4,404 +27%
SS Avg. $/sf $195/sf $189/sf -3%

Yes, the conversion from foreclosures to short sales is happening, though it doesn’t look good for the pricing trend. You could call +/- 3% just statistical noise, but for those who believe that the lenders save big money by short-selling vs foreclosure should think again.

The fraud seems to be getting more outrageous too – did you see the one yesterday that if the realtor would have listed it at market value, the seller would have made money? Instead, he listed it at $100,000 below the loan amount, and called it a short sale – at least for the usual five seconds before he withdrew the listing!

(withdrawing a SS listing is common when the listing agent has his own buyer and doesn’t want competition – he shows the bank a copy of the listing taken during the five seconds that it was active)

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