Novato has half the Short Sale listings in the Marin MLS (B.A.R.I.E.S.) yet they are not closing escrow at anywhere near the rate they are going into contract. Short Sales in general have a high escrow fall-out rate and most of the time that is due to the bank taking too long to respond to legitimate offers. The banks are overwhelmed with paperwork from poor performing loans and don’t seem to know how to deal with the situation.
Here is the interesting part; Novato currently has 121 Short Sale listings and 48% of them are in contract (various stages of the sale process). If that percentage were actually closing escrow it would represent a very strong Sellers Market, which is definitely not the case.
In July 2008 Novato had just 9 Short Sales close escrow. Assuming the number of listings was similar in July to this August, which it is that means that less than 20% of the Short Sales are closing which is way off from the 48% in contract.
What happens to these homes when they fall out of escrow? Some go back on the market to give it another go but many are taken back by the bank and sold as bank owned property (REO – Real Estate Owned “by a bank” ).