Why Do Banks Even Consider Short Sales?

Banks do have another option when considering whether or not to approve a short sale. If the buyer is in default, the bank will have the option to foreclose on the homeowner at some point and take the property back (and sell it). If the homeowner is not in default the bank has the option to not approve the short sale and keep receiving monthly payments as usual (hypothetically). So, what's in it for the bank to approve a short sale?

According to REBAC (The Real Estate Buyer Agent Council), most banks lose on average $40,000 or more when they foreclose on property and sell it as an REO (Real Estate Owned) listing. There may be repairs involved. The home value may be declining every month it sits on the market unsold. There may be other factors involved. In many cases, the sooner the property gets sold, the greater the recovery will be for the bank(s) involved. It is also a known fact that properties tend to be more marketable when they are furnished than when they are vacant. An REO is almost always vacant, while a short sale is most often furnished. In fact, many banks consider foreclosure and selling an REO property as their worst option. You will find that many banks are open to considering short sales and even motivated to get them approved. However, you will also find that the process takes much longer than a normal transaction. There are more specific things that banks must consider when analyzing a short sale package.

Your marketplace may have short sales for you to consider, although short sales are not right for every buyer. Consult with you exclusive buyer agent about all your options to make a wise decision for your specific circumstances whether or not to pursue short sales as viable options for your home purchase.