Opportunity, frustration, short sales in Twin Cities housing market

With job security, low debt and a bright economic outlook, Adam Leistico sees this as a great time to buy a house. The potential boost from the $8,000 federal home buyer credit makes it even more alluring.

But the opportunities he’s seeing also make him an eyewitness to the challenges of trying to buy in this market. Leistico, a source in our Public Insight Network, wrote:

We started looking for houses in St Paul in late January of ’09, and we found a place that we immediately fell in love with for a price that was too good to pass up.

Sadly, it is a short sale, and we have been on the line for over two months now waiting to hear back from the bank on our offer.

In short sale situations, the homeowner owes more on the house than he’ll get from the sale. The bank, which likely ends up losing money on the deal, must sign off on the sale.

That’s created a sticky situation in this market and others with banks wanting to protect their financial interests in a money losing situation and Realtors and potential home buyers frustrated by the pace of the approval process.

The banks’ concern is understandable. Sale prices for “lender mediated” homes, including short sales and foreclosures, fell dramatically over the past year in the Twin Cities. There’s a yawning gap now between the median selling price of “lender mediated” homes compared to traditional home sales, according to the Minneapolis Area Association of Realtors.

The stock of “lender mediated” housing is starting to fall thanks largely to buyer demand. That, of course, can create its own set of hassles.

Adds Leistico:

It is a very good market for buyers out there, but it is also extremely frustrating. We have made offers on many places, all of them in multiple-bid situations that don’t turn out in our favor.

We have taken tours of even more places that are sold two days after they are listed. It is exciting, but amazingly taxing mentally, especially for folks like us who are trying to find a nice place to settle down.

If you’re connected to the current housing market — banker, Realtor, homebuyer, seller, observer — I’d love to hear from you about what you’re seeing.

Click here and share an insight about the current market.

Also, check out the map below for recent responses from our Public Insight Network on housing issues.

Bonus data: Coincidentally, a Wall Street Journal story today on rural foreclosures, has a great graphic on foreclosures in Minnesota by county. Definitely worth checking out.

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