With the slumping real estate market in Orlando, Florida, and record numbers of foreclosures making news every day, you may have seen or heard the term "short sale" and wondered what it means and how it relates to a foreclosure. A home foreclosure is a legal process used by a lender to regain ownership rights to a property after the homeowner defaults on their payment agreement. A short sale occurs prior to a foreclosure when the lender agrees to accept less than the remaining mortgage amount, effectively eating part of the loss. The lender avoids the legal procedure of foreclosure and the seller doesn't have a foreclosure on his credit record (though a short sale is still a serious credit ding). For a homeowner struggling to make mortgage payments and unable to work out a loan restructuring modification with the lender, a short sale may be a better option than a foreclosure. For a buyer looking for a bargain, a short sale may appear to be a better route to home ownership, but the process itself is complicated and there are pros and cons to consider before placing an offer.
1. Sales Price Is Not A Bargain
During the real estate market bubble of 2005 and 2006, many Central Florida home sales were based on local buyer frenzy with buyer bidding against buyer which resulted in exorbitant sales prices. Appraisals for refinances were based on those high sales prices. When the market cooled, homeowners found they owed more than their homes were worth and, thus, were upside down on their mortgages. While a lender may agree to a short sale and take less than the mortgage balance, they may insist on pricing the property at fair market value which means it may not be the smoking bargain you're looking for.
What to do: Work with an agent who's experienced in short sales in the Orlando area, and ask for a comparative market analysis (CMA) so you can make an informed decision about price.
2. Homes Sell "As Is"
Most lenders will not make any repairs since they're already taking a financial hit. They expect a buyer to accept a short-sale property in its current condition. It is in your best interest to retain the right to order and pay for a general home inspection or specific inspections such as roof, pest (especially important in the Orlando area), and sewer, but consider the reports for-information-only. Such reports have value in alerting you to potential problems with the home, but will not provide you with leverage to barter with the lender.
What to do: Order inspections so you're prepared for any additional investments you may need to make after you close.
3. Lenders May Renegotiate Anytime
Lenders do everything possible to mitigate their losses, so they frequently include a clause in the short sale contract that allows them to renegotiate at anytime. They may want to take advantage of an upturn in the Orlando market, a new law passing, or any other change that might enable them to increase the sales price.
What to do: An agent who specializes in short sales can keep you apprized of changing conditions that might affect your short sale agreement.
4. Discounted Real Estate Agent Commissions
Agents working with short-sale properties may be accepting a reduced commission from the lender instead of what's customary for your area. While this may not seem to affect you, it might come into play if you are working under a Buyer-Broker agreement and have agreed to pay a certain percentage to your agent. Your agent may expect you to make up the difference between what the lender pays and what you agreed to in your Buyer-Broker contract.
What to do: Before signing a Buyer-Broker agreement, discuss an adjustment to the commission rate for a short-sale property and include a clause or add an addendum later to cover this situation.
5. Higher Closing Fees
In the Orlanda area, certain closing fees are traditionally paid by or split with the seller. In a short-sale transaction, the lender will not be so generous and you could find certain fees on your side of the escrow at closing.
What to do: Be aware upfront of all fees the lender expects the buyer to pay.
6. Complications from Multiple Loans
If the homeowner took out a second mortgage or line of credit on the property, a short sale can get even more complicated. The lender with the first mortgage may have to offer some payoff to the lender in second position.
What to do: Make sure your agent is experienced with short sales in the Orlando area and understands the potential consequences with a multiple-loan situation. Your agent can research the title so you know what lenders are involved and the existing loan amounts.
7. Length of Time to Closing Date
Depending on the lender or lenders involved, they may be overwhelmed with foreclosures and may take a couple of weeks or months before they address a short-sale purchase offer. Lender response times throughout the purchase process can vary and drag out the transaction for months. The buyer has little recourse and must wait out the lender's time constraints.
What to do: Although the lender may be bogged down with foreclosures, an experienced short-sale real estate agent will know the best way to work with the lender to minimize delays and can include a deadline for the lender's response in your sales offer.
Summary
With all the above negatives of a short sale, why should a buyer even consider this approach to home ownership in the Orlando area? Because you may find the perfect property at a great price! Buying a home is more than purchasing a property: It's a personal decision about where and how you choose to live your life. When you find that special home in Central Florida where you can picture yourself making memories and enjoying a particular lifestyle, you'll know you've found the right place, and the benefit of realizing those dreams outweighs potential pitfalls of buying through the short-sale process.
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Orlando Florida Real Estate Market Update - February 2008
Below, you'll find a complete market update of all greater Orlando communities. You can also view specific Orlando Florida real estate market info for Lake Mary, Longwood, Sanford, Casselberry, Winter Springs, Oviedo, East Orlando, Downtown Orlando, Winter Park, Apopka, and Maitland. Just click on the specific Orlando community in the left hand navigation menu and you will find the Orlando MLS info for the specific area. This information is pulled from the Orlando MLS and updated for you monthly. We also provide you the ability to receive automatic updates on homes for sale from the Orlando MLS by email.
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| Jan 2007 | 5.91% | 21,266 | 6,630 | 2,409 | 2,504 | 362 | 1,426 | 1,922 | 1,469* | 90* |
| Febr 2007 | 5.92% | 22,055 | 5,566 | 2,387 | 3,096 | 302 | 1,236 | 1,775 | 1,541* | 91* |
| March 2007 | 5.83% | 23,547 | 6,426 | 2,434 | 2,893 | 480 | 1,431 | 1,970 | 1,779* | 90* |
| April 2007 | 5.93% | 24,435 | 5,832 | 2,346 | 2,948 | 346 | 1,359 | 1,927 | 1,530* | 97* |
| May 2007 | 5.94% | 25,463 | 6,200 | 2,334 | 2,611 | 377 | 1,446 | 2,214 | 1,745* | 94* |
| June 2007 | 6.40% | 25,923 | 5,667 | 1,853 | 2,700 | 404 | 1,657 | 2,150 | 1,524* | 98* |
| July 2007 | 6.50% | 26,018 | 5,404 | 1,717 | 2,571 | 329 | 1,786 | 2,206 | 1,524* | 96* |
| Aug 2007 | 6.60% | 26,313 | 5,582 | 1,451 | 2,194 | 420 | 1,848 | 2,379 | 1,467* | 108* |
| Sept 2007 | 6.21% | 26,310 | 5,000 | 1,173 | 2,012 | 306 | 2,180 | 1,953 | 970* | 111* |
| Oct 2007 | 6.21% | 26,330 | 4,958 | 1,304 | 1,923 | 310 | 1,969 | 2,181 | 1,090* | 111* |
| Nov 2007 | 6.08% | 26,172 | 3,610 | 1,193 | 1,806 | 238 | 1,768 | 1,849 | 1,029* | 114* |
| Dec 2007 | 5.93% | 24,298 | 3,415 | 1,023 | 1,559 | 220 | 3,157 | 1,462 | 1,076* | 113* |
| Jan 2008 | 5.60% | 25,724 | 5,474 | 1,239 | 1,731 | 265 | 1,804 | 1,805 | 756 | 120 |
According to the Orlando Regional Realtor Association, Orlando's housing marketing upheld its annual tradition in February with a month-to-month increase that marks the start of the spring selling season. The 922 home sales that took place in February 2008 are a 13.4 percent increase over January 2008's 813 sales; however, home sales in February 2008 are down by 40.17 percent when compared to February 2007. Homes of all types spent an average of 123 days on the real estate market before being sold in February 2008; the average home sold for 93.21 percent of its original asking price.
The majority of Orlando area single-family homes (188) that changed hands in February 2008 were sold for between $200,000 and $250,000. Another 117 homes sold in February for between $250,000 and $300,000. Two hundred twenty-nine homes sold for less than $200,000 in February, and 208 sold for more than $300,000. On the extreme ends of the scale, 15 homes were sold for $1 million or more while only nine (up from four in January) homes sold for less than $50,000.
There are currently 25,984 homes available for purchase through the Orlando area MLS. Inventory increased by 260 homes in February 2008, which means that 260 more homes entered the market than left the market. Compared to last year, the February 2008 inventory level (25,984) is 17.81 percent higher than it was in February 2007 (22,055).
The current Orlando Florida area home inventory level reflects a 28.18-month supply at the current pace of sales, which is down from January 2008's 31.64-month supply.
There are 19,531 single-family homes currently listed in the Greater Orlando area MLS. Most (6,872) are listed in the $200,000 to $300,000 price range. Condos currently make up 4,242 offerings in the MLS, while duplexes/town homes/villas make up the remaining 2,211. Most Orlando area condos (573) are priced at $120,000 to $140,000, but nearly equal numbers are posted in both the $160,000 to $180,000 and the $200,000 to $250,000 ranges. The majority of Orlando area duplexes/town homes/villas (498) are listed in the $200,000 to $250,000 range.
So, What Does All This Mean To You?
Well, that depends upon which side of the transaction your on. If you're selling your Orlando area home, be prepared to price it according to today's market values, and have it in model home condition. You'll also want to prepare for the average Orlando time on market of 123 days. Due to the high volume of homes on the market, the competition is going to be fierce. You've got to be priced aggressively, and have the best showing home...otherwise, prepare for longer than 123 days, because it's going to sit! You'll also want to make sure you've got an aggressive real estate agent who's marketing plan is geared heavily toward the internet.
If you're looking to buy a home in the Orlando area, you're in luck. You've got an abundance of homes to choose from, great prices and extremely low interest rates! Don't take take it for granted though...the best homes are still selling very quickly and are getting multiple offers. If you find the home of your dreams, don't try to sleep on it...make your move! If you're looking for a great deal, contact us for a complete list of area foreclosures and REO or bank owned homes. You may even want to consider a short sale. We represent many home sellers who have to sell their home quickly to avoid foreclosures. View our current inventory in our Featured Homes. If you don't see what you're looking for here, call us...we've got access to every short sale on the market and can easily email you details on thost that match your needs.
Median Household Income: $35,732
State Average: $38,819
Median Family Income: $40,648
State Average: $45,625
Per-Capita Income: $21,216
State Average: $21,557
Median Value of Owner-Occupied Housing Units: $103,200
State Average: $105,500
Median Price Asked for Housing Units: $94,900
State Average: $92,200
Source: 2000 Census
| Year Home Was Built | Orlando | Orange | Florida |
| Built 1939 or earlier | 5.15% | 2.43% | 2.86% |
| Built 1940 to 1949 | 5.32% | 2.78% | 3.07% |
| Built 1950 to 1959 | 13.73% | 10.02% | 9.24% |
| Built 1960 to 1969 | 12.23% | 11.49% | 12.79% |
| Built 1970 to 1979 | 17.70% | 17.16% | 23.09% |
| Built 1980 to 1989 | 22.35% | 26.06% | 26.24% |
| Built 1990 to 1994 | 10.41% | 13.47% | 10.52% |
| Built 1995 to 1998 | 9.18% | 12.53% | 9.24% |
| Built 1999 to March 2000 | 3.93% | 4.07% | 2.93% |
| Household Income | Orlando | Orange | Florida |
| Less than $10,000 | 10.10% | 7.74% | 9.57% |
| $10,000 to $14,999 | 6.88% | 5.73% | 6.73% |
| $15,000 to $19,999 | 7.89% | 6.47% | 6.99% |
| $20,000 to $24,999 | 7.65% | 7.03% | 7.50% |
| $25,000 to $29,999 | 8.19% | 7.24% | 7.26% |
| $30,000 to $34,999 | 8.08% | 7.24% | 6.96% |
| $35,000 to $39,999 | 7.04% | 6.55% | 6.32% |
| $40,000 to $44,999 | 6.73% | 6.59% | 5.98% |
| $45,000 to $49,999 | 5.02% | 5.35% | 5.11% |
| $50,000 to $59,999 | 8.40% | 9.34% | 8.90% |
| $60,000 to $74,999 | 8.72% | 10.51% | 9.56% |
| $75,000 to $99,999 | 7.60% | 9.48% | 8.71% |
| $100,000 to $124,999 | 3.21% | 4.64% | 4.28% |
| $125,000 to $149,999 | 1.35% | 2.10% | 2.01% |
| $150,000 to $199,999 | 1.38% | 1.81% | 1.80% |
| $200,000 or more | 1.74% | 2.18% | 2.32% |
| Travel Time to Work | Orlando | Orange | Florida |
| Less than 5 minutes | 1.78% | 1.70% | 2.32% |
| 5 to 9 minutes | 7.34% | 6.64% | 8.89% |
| 10 to 14 minutes | 12.61% | 11.39% | 13.76% |
| 15 to 19 minutes | 17.37% | 15.82% | 16.20% |
| 20 to 24 minutes | 18.52% | 16.97% | 15.52% |
| 25 to 29 minutes | 7.86% | 7.63% | 6.04% |
| 30 to 34 minutes | 17.66% | 19.03% | 16.08% |
| 35 to 39 minutes | 2.95% | 3.43% | 2.72% |
| 40 to 44 minutes | 2.97% | 4.03% | 3.55% |
| 45 to 59 minutes | 5.87% | 7.80% | 7.97% |
| 60 to 89 minutes | 2.78% | 3.36% | 4.52% |
| 90 or more minutes | 2.30% | 2.20% | 2.44% |
| Worked at home | 2.18% | 2.54% | 3.00% |
Reminder: If you are wanting to sell your Seminole County or Orlando area home in the next 6 to12 months, now is the time to begin putting your plan into place, while time is still on your side. Please contact us for any real estate assistance you may need.
We're experts at putting people together with homes they love and can afford. Contact us today for information on Orlando and Seminole County real estate, Orlando & Seminole County homes for sale, Orlando & Seminole County relocation information, a free market analysis of your Orlando area or Seminole County home or statistics on homes in Orlando & Seminole County Florida or the surrounding Central Florida area, including Seminole County, Orange County, Lake County and Volusia County. We're always available to answer your questions.
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