When Does a Home Sale Count?
When I wrote a post a couple of days back about the uptick in existing home sales, one commenter suggested that most of the sales were the result of investors buying up foreclosures and short sales. I posted something very similar on another, industry specific blog, and got pretty much the same reaction from a couple of readers. The implication is that since a lot of the home sales were for foreclosed homes or short sales than they somehow don’t count or, maybe, they shouldn’t be weighted as heavily in the statistical data.
I say: Poppycock! (since this is a “G-rated” blog). All home sales regardless of the type of home involved is a home sale. When residential real estate transfers from one owner to another for financial consideration (i.e., money) it is a home sale. It doesn’t matter what type of residential real estate:
- condominium
- town house
- semi-detached (duplexes)
- single family home
- even multi-family up to four units
It’s all considered residential real estate regardless whether or not it is in foreclosure or in short sale status. It doesn’t matter if the home is in pristine condition or is a real fixer-upper or just a shell that’s been gutted of all the appliances, cabinets, light fixtures and anything else a previous owner could strip from the house.
It doesn’t matter is the Seller is a person, like you and me, with equity in their home or if the Seller is a bank, and Estate of a deceased owner, or any other entity.
A sale is a sale.
Why Investor Sales Are A Good Thing
It is said that real estate investors are the ones starting to buy up these short sales and foreclosed homes.
Good!
In fact, I wish more real estate investors would get into the game and buy as many as they could. Here’s why:
- Real Estate Investors aren’t emotionally involved in the property. They run the numbers and if the numbers work, they invest. If they don’t, they take a pass. If real estate investors are starting to buy real estate that must mean the numbers are working.
- Real Estate Investors have the money. These folks either have cold, hard cash or can get it. That means there isn’t any question about whether the real estate will pass from seller to buyer…and it’s usually pretty quick.
- Real Estate Investors help reduce the inventory of available homes. This is a good thing. The fewer homes on the market whether they’re short sales, foreclosed homes or “plain vanilla” the quicker the real estate market will reach equilibrium and stabilize.
- Real Estate Investors are a leading indicator of market activity. This means that once real estate investors start re-entering the market there is opportunity. When the numbers work, they work. It usually means that “just regular folks” – people who want to buy a house to live in – will be shortly behind.
So, it doesn’t matter to me or to the people keeping track of the statistics about home sales. Investment property, primary residence…either way.
Now all we need is a few more months of increased sales and we’ll have a bonafide trend. I’m keeping my fingers crossed.
February 14th, 2009 at 4:55 am
I agree with you totally, any home selling matters in a big way, people are just a little spoiled and hurt right now. Homes that sell, help the overall markets, once we rid of these foreclosures, it stabilizes prices, depletes inventory levels and makes the homebuying sector more balanced for sellers. Seller should be praying that these foreclosures get sold ASAP!
It will only help that we get rid of these Foreclosures, imagine this, the only homes on the market are REO’s, then all of a sudden investors buy them, guess what? Put your darn house on the market, make people realize how great your home is and get moving. Good homes sell in any market and besides, if home prices are low, chances are your next home will be a lot cheaper…good post!