Why Do Banks Do Short Sales?
A question we get asked all the time is, “Why do banks do Short Sales?” It’s about the money. Banks make an average of 13% more on a Short Sale than they do on a foreclosure. One of the other factors is that no matter what, they end up paying all the fees and commissions on a bank owned sale; whether it’s a Short Sale or a foreclosure. A lot of people don’t realize that there are no fees for you to Short Sale your home. The bank pays for it all. This is probably why Short Sales have jumped by 200% in 2011. Banks know that once you fall behind, there is only a 10% chance that your home won’t go into foreclosure. So they realize that your chances are fairly high, unless you run into some big money or have a huge windfall, that once you are behind and your house is literally “upside down” where you owe more than it’s worth it makes no sense for you to even keep trying to crawl out. They know this, you know this, logically, and in the end the bank realizes that you will more than likely go into foreclosure. So this is why they are so quick to say yes to a Short Sale.
The other reason that banks prefer a Short Sale over a foreclosure is that the home stays in better shape. While someone is living in it, the owner is going to maintain it. They’re going to keep the air conditioning going, keep the water going, the electricity, and so on. The home won’t deteriorate quickly if you’re going for a Short Sale because you are living in it until you close the deal. When the house is foreclosed on, it can be ugly. Homes literally fall apart, air conditioning is off, some people even rip the air conditioning out of the house for the copper or looters come into the property and rip the place apart for valuable metals and such. We recently went to a foreclosed home where the air conditioner was literally ripped out of the house. Here was a $300,000 home, that probably cost $900,000 to build and the house literally had the air conditioning ripped out, copper tubing ripped out, mold, mildew and rot were starting to appear throughout the home. So in a case where there is a foreclosure, the homes literally deteriorate almost instantly. They have yard bills, maintenance, insurance, the list goes on. The banks realize that if they allow the home to go into foreclosure not only do they make less money in the end they end up paying out more money because in the winter pipes explode, in the summer the home is left to the elements of humidity without air conditioning and the house just falls apart. When they accept a Short Sale they’re more apt to have a home that is well kept or at least kept in living condition. They know that they’re not going to be faced with having to pay for expenses other than the expenses related to the sale of the home.
In Short Sales, homes sell for more money. The market is still dropping or flat but homes are still selling. The banks want to simply get their money and move on. They get their money back to work. It’s just common sense. If you could make more money and get it back to work for you wouldn’t you do it?
A Short Sale also stops their overhead. There is so much overhead to take care of with foreclosures and it gets expensive. As they say, “A bird in the hand is worth two in the bush.” In the end they have a happier buyer with a Short Sale because they get a good deal and a nicer home.
So you’re probably wondering why we’re giving you all of this information for free. We’d like to think that if there is one person out there we help who is in the position where they should do a Short Sale or who is on the fence about whether or not they should do a short sale; we can help them by informing them. In the end, the more informed people are about Short Sales the better the marketplace is for everyone involved. If you’re thinking about doing a Short Sale or thinking about buying a Short Sale and need guidance we are here for you. You are welcome to give us a call and talk to us about the facts and the reasons why or why not a Short Sale would be good for your current situation. We want you to understand what a Short Sale is all about, no matter who your realtor is. Of course selling homes is our passion and it’s also how we pay our bills, so we would be honored if you decided to give us a call and allowed us to help you with either making a Short Sale or even buying a Short Sale home. We have the knowledge, experience, and guidance you need to get it done right.
While other realtors may be intimidated by Short Sales, I specialize in Short Sales and have all the resources to get the job done. For more information email me at email@example.com or call 954.772.0108