Short Sales in the real estate world are up in many states and banks consistently maintain higher returns. If both have increased, what's "Short" about that in a Sale? Oh, and how about timing; how "short" is a Short Sale anyway?
SHORT SALE DEFINITION
A bank allowing a home owner to pay them less money than what is owed on the mortgages combined. (i.e. Home owner owes $300,000 and the bank allows a pay-off of $200,000. That is a sale short of $100,000)
MORE SHORT SALES
According to USA Today, there are more Short Sales happening now in some states than in previous months/years. Part of that is in order to avoid a devastating Foreclosure. In my experience as a Short Sale & Foreclosure Resource Realtor I have seen many people successfully complete a Short Sale of their home, many of those are homeowners that did not think it was for them or they did not even consider it as an option.
Why would someone not even know about a Short Sale option? Often it results in our pride, ego, embarrassment, etc. Who wants to admit to people close to them, or anyone for that matter, that they are struggling financially - that they may be losing their house. Or worse yet, the possibility of Bankruptcy. These are sensitive topics and require delicate conversations.
Effects on credit are controversial and ever-changing. In the past, Foreclosure vs. Short Sale could result in a 200-400 point discrepancy. Today those numbers aren't quite as drastic between the two; however, one needs to be more concerned about "Lend-ability." Regardless of your credit score, will a bank lend to you based on the other items in your history? In this regard a Short Sale will not have the same effect as a Foreclosure or Bankruptcy.
Why would a bank agree to a Short Sale? There's quite a savings for the bank in allowing for a Short Sale compared to the loss experienced in a Foreclosure. As RealtyTrac is quoted in the USA Today article:
"In the second quarter, short-sale homes sold at a 21% discount to non-foreclosure homes, while bank-owned homes went at a 40% discount, RealtyTrac says."
Foreclosed home losses are seen as double that of Short Sales.
Want a confidential conversation? Contact me and we can discuss your situation.
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|Rodney Kennedy, Realtor
Keller Williams Realty
9175 Carothers Pkwy, #110
Franklin, TN 37067