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Is Los Feliz Bidding War Evidence That Short Sales Are Over?

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Just last month this house was underwater. But now look at it, dry as a bone. The two-bedroom Los Feliz bungalow on Prospect Avenue hit the market as a short sale in January, meaning the asking price of $569,000 was less than what the owners still owed on their mortgage. The house had failed to sell last year when it was listed at $699,000, and the owners eventually pulled it off the market in November after it failed to receive a single offer (even with a $20k price chop). But between November and January, Los Feliz homeshoppers seem to have collectively thrown up their hands and given in: after 9 offers were made, the house is now in escrow and looks set to sell for "close to" its last 2012 asking price of $679,000, broker Wesley Earley tells us. Which means the sale is no longer short; the bank gets its money back and the sellers actually make a profit.

Earley tells us that this is becoming more common. He credits (or blames, depending on which side you're on) a combination of the superlow number of houses on the market right now, investors swooping in with all-cash offers, and what he called "buyer fatigue." People who have been trying to buy for months and are tired of losing house after house are just busting through their budgets, figuring that an extra $30k on a mortgage won't make that much difference with interest rates as low as they are. The good news is that, according to Earley, when they do occur, banks are much more comfortable with short sales now. Instead of dragging on for months with worries that the bank won't approve the sale, he says they're working almost like regular sales now; the banks are approving everything. The bad news? Says Earley, "normal buyers don't have a chance right now."
· 4551 PROSPECT AVE [John Aaroe Group]