The Positive Aspects Of Short Sales

The Positive Aspects Of Short Sales

Short sales have doubled in volume since they first peaked in 2009. In the current housing market it is estimated that 12 percent of all homes sold are short sales. Bank Of America, the largest home mortgage provider is expecting to do 100,000 short sales in 2011. Wells Fargo has stated that there has been an increase of short sales in a “slight but steady” rate in recent months. When compared to a non-foreclosure property a short sale home sells for an estimated 21 percent price drop in comparison to a bank owned property that sells at a 40 percent price drop. These statistics demonstrate why it is in the banks best interest financially to prefer the short sale route rather than sell the home as a foreclosure. They stand to lose more money taking the property back vs negotiating a short sale with you the seller. It is in their best interest financially and nothing dictates a decision better than money.

As disclosed by the major banks there has been a steady increase in short sales and the reason is quite simple. Foreclosed homes are selling at a lower price point. There are fewer and fewer on the market on a monthly basis. Because of this the median price point in Tucson has dropped by 21 percent from 2 years ago, and has dropped 3 percent in the last month. The median price of homes in Tucson has also decreased by 14.3 percent in the last year. In 2010 approximately 42 percent of Tucson homeowners had negative equity or where upside down on their mortgage due to the sale price of homes in their area.

Short sales are a solution to a problem that benefits everyone involved. Not only do banks receive a higher profit from a short sale compared to a foreclosure but they do not accrue the costs that come along with a deteriorating property. A new buyer benefits by purchasing a home that has not been left abandoned but cared for until the time of the sale. There are also many advantages for the seller. A short sale reduces the credit impact that a full foreclosure can have on your record for 7 years. In many cases banks do not seek to recoup their loss from the homeowner. And if they do foreclosure is an option at that point. The impact on a credit report is not as severe as most people think either. A short sale impacts a credit report by 85- 160 points, a 30 day late payment impact a credit score by 40-110 points, and by a 120 day late payment the score is impacted by 100-160 points. Of course this can vary depending on each persons situation and what they are “not” paying but overall we have seen most of our clients with good credit take a 100 point hit after the short sale has been recorded. Then once that same person pays their car payment and credit cards on time they are back up in the 70 to 80 points within 6 months to a year. This is the exact opposite with a Foreclosure. If you are thinking of a short sale please give us the opportunity to give you a free 1 hour consultation with one of our caring and knowledgeable staff about your unique situation. A short sale is not right for everyone but it may be the best option for you and your family to move on in your life with out ruining your financial future.