TREND Examines Use of "Short Sale" Terms in MLS Blue

A caricature on the Business page of the Sunday, April 19, 2009 edition of the Philadelphia Inquirer seemed ominous. The outline of the state of Florida with a for sale sign and the word "cheap" hanging off of it.

"Welcome to Florida: sun, surf, and loads of property at fire-sale prices," the story read, alluding to the growing number of foreclosures in the Sunshine State.¹

Median prices have tumbled in Florida, some as much as 30 percent over the past year, according to the story. Similar headlines can be found in Las Vegas and California.

According to the latest statistics released by the National Association of REALTORS® (NAR), short sales represent 15 percent of recent real estate transactions across the country. NAR estimated lenders completed 13,000 short sales nationally during the fourth quarter 2008, when more than two million homes were in foreclosure.

In the Philadelphia metropolitan region, the percentage of short sales appears to be much lower than that. In January 2009, TREND examined the Remarks fields of 47,581 active listings and estimated that 5.2 percent, or 2,483, of them were disclosed as potential short sales. That percentage has remained fairly steady. In June 2009, the number of short sales was 5.5 percent, or 2,819 of active listings.

The limited view of this potential segment of the market demonstrates what other sources have said: that the problem in Philadelphia is not as serious as in other parts of the country.

A Look at Local Numbers

Here are the counties from each of the states in TREND's MLS Coverage Area, with the highest percentages of short sales in its active listings in MLS Blue during June 2009:

Delaware County 10.3% - New Castle County 6.5% - Kent County

New Jersey 9.4% - Camden County 8.4% - Burlington County 8.3% - Mercer County

Pennsylvania 5.0% - Bucks County 3.8% - Delaware

June Statistics on Other Terms

Foreclosures: Only 0.3 percent of active listings could be considered foreclosures, according to the listing remarks. This number has remained steady in 2009. Bucks County was the only county to be significantly above this average, at 0.6 percent.

Corporate Owned: These properties constitute only 0.3 percent of listings in MLS Blue, which is the same for the previous four months. The highest counties were Salem County at 1.1 percent and Camden County at 0.9 percent.

Third Party Approvals: About 1.2 percent of listings require this type of approval for the sale. That number has increased slightly since February 2009. Camden County at 3.2 percent, Salem County at 2.6 percent and both Burlington and Kent counties at 2.5 percent fall significantly above the average.

Disclosure is Mandatory

On May 20, 2009, TREND's Board of Directors voted to make the disclosure of short sales mandatory in TREND. This is effective on July 3, 2009. In an effort to help members determine if a property is a short sale, TREND is evaluating additional fields in the MLS that would make it easier to search and record short sales and other transactions requiring third party approval.

¹"Headed South for Bargains," written by Alan J. Heavens, Philadelphia Inquirer, Sunday, April 19, 2009, page 1, Business section D.

²In compiling these statistics, TREND searched the Remarks fields of active listings in MLS Blue for variations of terms, such as "short sale," "foreclosure," "corporate owned" and "third party approval."

from TRENDLink, Volume 14, Issue 2, Summer 2009