Welcome to shortsaleshift.com. Minnesota’s leading short sale agents, Josh Pomerleau and Sarah Willman are going to discuss why a bank would want to complete a short sale.
One of the first comments we get from property owners that are going through foreclosure or starting to skip their payments is “Why would a lender want to do a short sale?”. Often times the home owners think that it merely sounds to good to be true. However, there are a lot of reasons why a lender would fancy a short sale over foreclosure. At the end of the day, it saves the bank lots more cash to progress through a short sale than to progress through a foreclosure.
There are a lot of negative costs associated with foreclosing on a property. There are lawyer fees. Many times the property owner will leave the property. When that occurs, the bank has to worry about people breaking into the home and thieving things. Also, the general maintainence of the house is ignored. There are also cases where home owners will damage their property because they are upset with the lender taking their house from them.
The bank looks at it like this. It is a great deal less likely that the home will be damaged when they complete a short sale. It gives the home owner a sense of finality by not losing their house. Then the property owner can move on under their own power.
In addition, the lender will have to insure the property from all types of scenarios such as tornados and other natural disasters. Those costs are also unconstructive to the bank.
At the end of the day that is why the bank would want to complete a short sale. The bank also wants to close on the house earlier than they could with a foreclosure. Getting that cash from a short sale allows them to turn around and loan that capital out again. So, the time value of capital is worth quite a bit to the lender.
Through the short sale method, data show that the lender will net greater money from a short sale than they will from a foreclosure.
Get more help from short sale Realtors, Josh and Sarah, at Short Sale Shift presented by the Short Sale Specialists of Minnesota
