Why would your bank say yes to a Short Sale?
It can sometimes seem to go against everything we are taught about borrowing money, but in today’s market, banks will gladly accept a short sale as an alternative to foreclosure. Here are three reasons why:
Reason #1: In a short sale, the bank never owns the home – It is often overlooked, but this is one of the major reasons why banks prefer to short sale. Having to take back the home and then sell it at auction is a major undertaking that can be expensive. In a Short Sale, there is already someone who wants to buy the home, so that hassle is taken care of.
Reason #2: In short sales, the home is generally in better shape – It is a sad fact, but when people are about to lose their home to foreclosure, they will sometimes try to distance themselves emotionally from the home in order to cope. This can lead to the home not being properly maintained, which makes it that much harder to sell. In a short sale, the seller is always being proactive and is generally more responsible when it comes to caring for the home.
Reason #3: In a short sale, the bank gets more money – Ultimately, this is the main reason. Even though the bank is not getting the full amount of the loan, the amount of the average short sale is almost always significantly more than what they can sell a foreclosed home for at auction. In 2011, even the most qualified loans (called Prime loans) that the bank to take a 49%-54% loss. With short sales, the losses are typically 25% or less and the process is much quicker. All of these factors combine to make a Short Sale a better solution than foreclosure for the bank.
Besides the fact that we have helped over 1000 Families successfully navigate through the short sale process and countless others have completed short sales across the country, Short Sales actually make sense to banks.