California’s pending home sales dipped in July, as did the share of distressed property sales, according to a report released by the state’s Realtor group this week.
The California Association of Realtors (C.A.R.) says 44.5 percent of home sales contracts accepted last month involved distressed properties. That’s down from both a month earlier and the same period last year, when the distressed share was 46.9 percent and 47.7 percent, respectively.
C.A.R.‘s data show that California counties with an extremely high portion of REO and short sale transactions a year ago continue to be flooded with distressed property sales.
Madera County leads the way, with 86 percent of July’s home sales counted as distressed. Other notables include Lake County (73%), Tehama County (72%), Merced County (71%), and Solano County (70%).
Of the distressed properties sold statewide, 26.7 percent were REO. That figure represents a decline from 27.3 percent in June, but is up slightly from the 26.3 percent REO share reported in July 2010.
Short sales were down by both comparisons. They made up 17.5 percent of July’s total sales contracts, versus 19.3 percent in June and 20.9 percent in July of last year.
C.A.R. says short sales will remain a part of the California real estate landscape for years to come, but the organization is concerned that lenders’ requirements have made closing these transactions a difficult process.
The state’s Realtors recently sent letters to the heads of the nation’s largest lenders – JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo – making recommendations on how the process can be improved and calling for the lenders’ urgent attention to address the issue.
Beyond the customary requests for realistic timelines and explanation for short sales that are rejected, the trade group is asking the lenders to disclose up front whether or not they actually own the original loan and be clear on who has the final authority to approve a short sale offer.
Realtors also say the process would move along much more quickly if lenders would pre-approve the short sale and price upon request, prior to the property being listed.
They want the lenders to increase the amount junior lien holders are given for agreeing to a short sale; second mortgages can often derail a transaction
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