How to Find Short Sales in the MLS

It’s important for real estate agents to track the percentage of listings where the homeowner is in financial distress as well as REOs (real estate owned), compared to the overall number of listings in a given market area. When short sales, pre-foreclosures, and bank-owned property make up a larger percentage of the overall available number of homes for sale, this has a downward effect on home values in that area. Yes, neighbordhood to neighborhood there “may” not be any short sales or bank-owned listings…today.  However, we are on an upward trend with foreclosures and watching what’s ahead can help home sellers make good decisions about how to choose a more agressive listing price if they are truly motivated to sell. We’ve done some research in the past on this. Galen wrote a post about search terms that work on Estately.  A few months ago I taught a Short Sale class in Snohomish County and an agent remarked that he had a buyer in a specific price range, I believe it was between $200K and $250K and he was looking for home in Everett, North to Marysville. He said ALL the listings in that price range and area were short sales with only one exception. Yikes! More short sales and bank-owned REOs mean more downward pressure on home values as the short sales that don’t close turn in to REOs and banks bring more and more REOs on the market. At this time, searching for short sales is not an option on the public-side MLS (Multiple Listing Service) per rule. Perhaps this is because the commission is paid by the seller and many believe it’s not in the sellers best interest to disclose the short sale status because that may draw low-ball offers. Now that we’re in a buyer’s market, perhaps home sellers and voting members of the MLS rules board would see that it’s in everyone’s best interest to attract the right kind of buyer. Investors have poured into California scooping up low end REOs because the sales price is low enough to allow for the home to be rented for enough to cover the mortgage payment long term. At some point, when Seattle area prices are more in line with rents, investors will want to search for short sales and REOs here.   Until then, by doing keyword searches we can also keep track of possible “ghost inventory” (REOs being held off the market by the banks) making an appearance here in the Seattle market. 

Here are some possible short sale and REO search terms to use besides just “short sale” and “REO.”

short payoff
motivated seller
subject to lender approval
bank approval needed

bank owned
corporate seller
corporate owner
no repairs
instant equity

What search terms should we add to the list?