The San Bruno real estate market made some modest gains in key areas over the past month. But, overall, it remained steady.

According to data supplied by MLSListings, San Bruno saw an 11.5 percent drop in the number of available homes on the market. The number of homes sold during the month rose slightly from 19 to 22, while the number of pending sales dipped by nearly half.

This data is in line with what we expect to see during this time of the year. The decrease in the number of homes on the market can be attributed to the holiday season as sellers put their plans on hold until after the holidays. The rise in the number of homes sold represents buyers snatching up homes at good price points before the holiday season.

The median price of a single-family residence in San Bruno dropped by nearly 5 percent to $534,000. This would support the increased amount of home sales at lower price points.

The investor market cooled substantially during the month of October. According to MLSListings, there were no sales of multi-unit residential homes (two to four units and multi-unit apartment buildings) during the month of October. Of the 16 available multi-unit homes on the San Bruno market, one-quarter of them went into a pending sale status during the month. This indicates that even though it's a traditionally slow time of the year, investors are moving on well priced investment properties. This should translate to closed escrows in December.

In what continues to be an encouraging sign of a recovering housing market, the number of distressed properties in San Bruno continues to decline. A distressed property is a bank-owned foreclosure or a short sale in which the lender will sell the home at less than what is owed on the mortgage. The number of distressed properties dropped to 26, representing 40 percent of the available single family homes on the market. Distressed properties had made up nearly 60 percent of the available homes on the market earlier this year.

Purchasing short sales

As previously mentioned, a short sale is a sale in which the lender agrees to sell the property for less than what is owed on the mortgage. Short sales require lender approval and lenders do their best to determine the current market value of a home before approving the final sales price.

It is important to remember a couple of points when considering the purchase of a short sale. First, the list price is very rarely the approved sale price. In fact, a list price in a short sale is little more than one person's opinion of what a lender is willing to accept. Furthermore, short sales are routinely priced under market value in order to spur offers. 

Ultimately, the lender makes the final decision on price, regardless of the seller's opinion. The lender does this through a broker price opinion (BPO) or even a full appraisal. So even though you as a buyer may have a signed contract at a lower price, the bank may approve the short sale at a higher price based on current market conditions. The lender approved price is the final sales price, regardless of what the offer stipulates.

Second, there is nothing short about a short sale. While the offer process may be quick, all short sale offers are contingent upon the seller getting short sale approval from the bank. The approval time represents the lion's share of the short sale timeline and can be dictated by a number of different factors including the lender's ability to process the short sale package, the seller's ability to submit complete documentation to the lender and any back taxes, mortgage payments or property liens that need to be negotiated prior to close of escrow.

Short sales can help sellers avoid foreclosure and save their credit ratings. They can also represent a good deal depending on the condition of the property and the number of lenders involved. However, buyers of short sales really need to understand the end-to-end process before considering a short sale purchase. 

Joseph Capote is a local Realtor who runs the blog San Bruno Views. His real estate column will appear monthly on Wednesdays.