Prospective homebuyers steered clear of distressed properties last month thanks to the ongoing robosigner scandal, according to the latest Campbell/Inside Mortgage Finance Monthly Survey of Real Estate Market Conditions released today.
Survey results revealed that 12 percent of closings scheduled for October were delayed or canceled due to REO title issues, while 24 percent were delayed/canceled due to issues with short sales.
In all, distressed properties accounted for 44.3 percent of transactions last month, down from 47.5 percent in September.
“Not surprisingly, the drop in overall distressed property sales activity helped produce a decline in average prices for short sales, move-in ready REO and damaged REO in October,” the release noted.
“At the same time, average prices for non-distressed properties rose.”
Additionally, the survey found that 14 percent of owner-occupant homebuyers and six percent of investors refused to view foreclosed properties in October.
Short Sales Time Consuming and Unpredictable
For short sale properties, 30 percent of owner-occupant shoppers and 20 percent of investors refused to view such homes.
One agent who took part in the survey complained that even a simple “no” on a short sale decision can take up to 12 months, and discourages buyers to look at those types of transactions.
So perhaps a short sale only makes sense if you’re a “would-be buyer,” not a motivated buyer.
Related: Short sale fraud.