Residential short sales bumped up to their highest level since April 2009 in the Puget Sound area in the third quarter, as banks were more willing to allow underwater homeowners to sell their homes for less than the amount owed. Some lenders even resorted to offering struggling homeowners cash incentives to sell.
That's according to a new report from Washington Property Solutions, a local short-sale negotiating firm that tracks short sales through the Northwest Multiple Listing Service.
"Lenders are drowning in bank-owned inventory and they are doing everything they can to avoid adding more distressed properties to their portfolio," said Washington Property Solutions CEO Richard Eastern in a release.
Two big banks, the Bank of America and Chase, have been offering some underwater homeowners cash incentives ranging between $23,000 to $35,000 to sell their homes for less than they paid for them, according to the report. In addition to cash incentives, banks are also more likely to forgive a portion of the debt on first and second mortgages and are streamlining procedures to spur short sales, Eastern said.
Short sales accounted for 16 percent of all sales of condominiums and single family homes in King County in the third quarter of this year. That compares to 10 percent of sales in the third quarter of 2011. Quarterly short sales in Snohomish County amounted to 21 percent of all home sales, up from 13 percent of sales in the third quarter of 2011. In Pierce County, short sales were 18 percent of sales, up from 11 percent of sales in the third quarter last year.
Even as short sales rose on one end of the seesaw, sales of bank-owned properties dropped to their lowest level since the third quarter of 2009 in King County and to their lowest level since the third quarter of 2010 in Pierce and Snohomish Counties.
Bank-owned property sales were cut in half, dropping to 10 percent of all sales in King County in the third quarter, compared to 22 percent of sales in the third quarter of 2011. In Snohomish County, bank-owned property sales were 15 percent of third quarter sales, compared to 34 percent of sales in the period in the prior year. In Pierce County, bank-owned property sales accounted for 20 percent of all sales in the third quarter, compared to 35 percent in the third quarter of 2011.
Overall, short sales and bank-owned property sales in the tri-county area represented a quarter of all home sales in the third quarter, compared to just under a third of all sales in Q3 2011.