Three years ago we had hardly any short sales on the market, today they represent 43% of the homes for sale and 70% of the homes in escrow and this won't change for long time. Why? Becouse never before have we had such a large percentage of homes upside down and ONLY method available to these homeowners is short sale. There is bankruptcy, loan modification or magic answer to people that in many cases, simply bought their home at the wrong time. Because of the complicated way these loans were sold and securitized, almost never does a successful loan modification change the loan balance. until that changes (highly unlikely for now),the problem of being upside down will continue for thousands of  SFV  homeowners for years to come. If "HAFA" incentives to short sale show promise, watch for all kinds of additional incentives to homeowners and lenders to go this route, the only route so far for an unhealthy and unprecedented housing problem.

THE TRUSTEE SALE IS THE NEW HOT REAL ESTATE TOPIC

THE TRUSTEE SALE IS THE NEW HOT REAL ESTATE TOPIC; This is literally the sale that occurs on the Court house steps. When a property goes through default, if the lender cannot work something out with the homeowner, they will offer the property FOR CASH as a last step before taking it back as bank owned. These properties are sold for cash, no inspections, often still occupied with the former homeowner.They represent high risk, high reward to investors and interest in them is exploding. Every day in SFV several properties will be on the docket for sale. 10 years ago there might be 5-10 investors there to possibly buy. Today it is not uncommon to have 5 times that many prospective bidders all with cash. Very often the sale is postponed for various reasons but just as often they sell, usually for 15-25% below market value. Highly risky, but in a market with so few homes for sale, this is where some creative types are finding their inventory. Recently the Government rescinded it's 90 day "anti flip" rule for FHA financing. This means that investors buy these homes to resell can now sell them to the largest pool of buyers there is- FHA loan buyers-without waiting 90 days. This will only help the sale of these type properties.

SHORT SALES WILL CONTINUE TO CONFUSE THE MARKET; I Started by suggesting that short sales will dominate because so much of our Valley has no equity. When these owners need to sell they will go "short sale". The problem has been, and likely will continue to be, agents and sellers with no motivation other than a quick sale to underprice the home and often sell below market value. The reason the lender are encouraging these sales is because it costs them less to dispose of an asset on a short sale than going through foreclosure-a lot less.