One of the most common questions I am asked as a Short Sale Specialist Realtor is “Why would my lender agree to a short sale?” Understandable question as it goes against everything we are taught about borrowing money. However, most banks will gladly accept a short sale as an alternative to foreclosure. Here are three reasons why:
With a Short Sale the Bank Never Owns the Home
This is one of the major reasons a bank prefers a short sale. Having to repossess a property, pay subs to maintain the property (re-key, winterize, yard up keep, etc), pay a realtor to market and sell, all costs tens of thousands of dollars. That is not the business the banks are in and is a major undertaking. In a short sale they never take possession. It is sold directly to a new buyer by the current homeowner.
In a Short Sale, the Home is Generally in Better Shape
When a house is headed to foreclosure many people do not take good care of the property anymore. Either because they are naturally distancing themselves from the property emotionally, or just simply cannot afford the upkeep. In extreme cases the home is stripped or left vacant. In these cases the property may be vandalized or in the winter plumbing may freeze and pipes burst. In a short sale the homeowner stays in the home until closing and takes better care of the property, keeping the value up.
In a Short Sale the Bank Gets More Money
Ultimately, money is the biggest reason. Even though the bank does not recoup the full amount due on the loan, the amount they will get in a Short Sale is significantly more with less expense and hassle to them than a foreclosure would be. There is no greater motivator to a bank than a higher net in their pockets with less work involved, right?