Distressed Sale’s Role in the Key West Market

Although the number of distressed sales nation wide are at 29%; there are some areas where the percentages are higher. Certain locations like California, Nevada and South Florida have higher rates. On checking the residential sold properties for the last 6 months in the Key West MLS there were 231 sales, 114 (49%) were distressed sales (short sale or lender owned).

Looking at how those sales break down, the short sales are on the market much longer then the bank owned properties and sell for a lower percentage of list price. Although there is legislation to make the short sales go faster they are still taking quite long. The Key West MLS currently has 193 pending sales; 139 of them are short sales. In these cases the seller has found a buyer and is waiting for the bank’s decision to approve the sale. It is not uncommon for this to take over a year.

The bank owned properties are usually listed very low to get a quick sale. Often there are multiple offers in a short period of time. Of these multiple offers a strong preference is given to cash offers or buyers putting down large down payments. These type of sales close faster and have a lower risk of failing thus further reducing the amount of time on the market. Because the bank owned properties are listed so low to start with many bids come in substantially over the asking price. Overall residential sales in Key West sell for 92.66% of list price for lender owned properties that percentage jumps to 96.77%.

With the distressed sales come much lower prices. Because of this, the number of sales are up with investors and first time home buyers jumping at the chances to take advantage of this opportunity.