Why Would Banks Choose to Do a Short Sale?

Why would banks want to agree to do a Short Sale?

First of all, the banks are in the business of lending money, not owning properties. They are very motivated to sell the property as soon as possible and get loans off their books.

Secondly, if banks choose to do a Short Sale, they will net (gross proceeds minus sale expenses) more than if they were to go into Foreclosure or trying to sell the property by themselves. Because if the banks choose one of the latter options, they will have to pay for all the utilities, taxes, HOA fees, repairs, asset management fees, etc.

The bottom line is, when banks do a Short Sale, they will usually loose 10%-15% of the market value. But when banks do a Foreclosure, they will loose 25%-30% of the market value, sometimes even more (depending on the market condition).

A bank will evaluate the financial situation of the homeowner, current market value of the property and will then make a decision about the Short Sale case. If for example the bank realizes that the market value of the property is $300,000, but $210,000 was offered for the property, the bank will most likely not approve this Short Sale as it will be more profitable for to Foreclose the property and sell it as an REO (Real Estate Owned by bank).

Ihor Pochay
REALTOR/ SHORT SALE SPECIALIST
Tarbell, Realtors
(909) 629-6186 ext. 339
ihorpochay@hotmail.com
http://www.myrealtorihor.com/