Many banks are now offering cash incentives to borrowers who are behind on their mortgage payments, encouraging them to sell their house in a short sale.
Previously, a government program called HAFA (Home Affordable Foreclosure Alternative) incentivized homeowners by paying them $3000 for relocation assistance at the time of completion of the short sale of their house.
Banks including J.P. Morgan Chase, Wells Fargo and Bank of America have taken a step further by paying huge cash incentives, starting at $5,000 and higher, to the homeowners for doing a short sale.
Why Banks Are Paying Cash Incentives to Homeowners Who Opt For A Short Sale
Foreclosure process is lengthy and very expensive. According to Francis Wissman of Moody’s Investors Service, loss severities on properties liquidated through short sales have averaged approximately 15% lower than those on properties liquidated through REO sales. This simply means that the bank loses money either way, but they lose a lot less money when they do a short sale vs. a foreclosure.
Due to this, more and more banks are now inclined towards short sales. We conducted a research on MLS on approximately 200,000 properties in Southern CA to observe short sales and foreclosure trends and found that there has been a significant increase in completed short sales in the past 3 years, while a downward trend has been observed in completed foreclosures.
Short Sales Trend in Southern CA
Foreclosures Trend in Southern CA
Why Short Sale Is A Better Option For Homeowner Vs. A Foreclosure
Effect of short sale on credit is not as negative as the effect of foreclosure or bankruptcy. With a short sale, the credit is negatively affected for 2-3 years. With foreclosure, or bankruptcy, the negative effect stays for 7-10 years.
So Why Should I Do A Short Sale?
Here are a few reasons for you:
- Improved credit score as compared to a foreclosure.
- Reduced stress once payments are gone.
- Leaving the property on your own terms and your own timeframe.
- To take advantage of the cash incentives being offered by the lenders.
Which Banks Are Participating
This is a fairly recent advancement in real estate industry. The terms and conditions are not yet clear. Contact your lender to know if they are offering these cash incentives to homeowners who agree to sell their house in a short sale.
And Why Should I Work with You?
Great question! You need to choose a broker who knows how to do short sales and who has a proven track record. You can’t trust your future to just anyone. My track record is over 95%. The national average is 15-25%. That means that I’ve closed over 95% of all short sales that I’ve taken on. I treat my clients like family members and truly look after their interests. We are relentless and never, ever, ever give up working tirelessly on your behalf.
I’d be happy to offer you a 100% FREE consultation by answering any questions on your particular situation, or by getting in touch with your bank to find out about the incentives they are offering to their borrowers for opting for a short sale. Contact me at 909-972-0041 or docrealtors45@gmail.com
Comments(2)