There is a noticeable shift underway in the number of properties being sold as Bank Owned (REO) versus Short Sales in Reno. According to the MLS in Reno (NNRMLS), the number of distressed properties for currently for sale in Reno in 2010 are 602 properties that are Bank Owned (REO) and 2494 properties that are Short Sales. This is a complete flip of these categories from 2009. In 2008 the Bank Owned (REO) properties were 80% of the distressed sales and the Short Sale properties accounted for around 20% of properties available for sale in Reno.
What has caused this flip in the distressed property market in Reno? The reason for this huge shift from Bank Owned (REO) to Short Sales may be simple. Today Short Sales mitigate loss much more effectively the Bank Owned (REO) sales. Finally it would appear that property disposition models and the lenders have finally caught on. The following example provided by a large Wall Street hedge fund heavily vested in mortgage backed securities (MBS) tells the story and illustrates why this shift is occurring.
The average loss per foreclosure (REO) is around 65%. Based on a $100K note the investors net a return of $35K. On a Short Sale the average loss is 40%. Using the same $100K example, the investor ends up with $60K return. That's a 25% increase over the investors net if the property is sold as a Short Sale instead of as an REO.
In summary, Short Sales are on the rise and Bank Owned (REO) properties are declining. If you would like additional information about Reno Real Estate Trends,or additional information regard Foreclosures versus Short Sales in the Reno Area, just give us a call or a text, or drop us an email.