For the first time since the real estate market came crashing down there were more short sales in a month than deals on foreclosures. The most recent data available shows that short sales accounted for 23.9 percent of all sales in January while 19.7 percent of sales were foreclosured homes, according to a Bloomberg article.
This is significant in that it shows a willingness on the part of banks to work with underwater home owners to sell their homes for less than is owed, thereby avoiding foreclosure. Many experts have long been saying that short sales are a better solution than foreclosure for banks and homeowners alike. Bloomberg quotes Jonathon Weiner, vice president of applied analytics at Lender Processing Services as saying, “Short sales should be the dominant way of disposing of assets” in distress. Some of the benefits of short sales as compared to foreclosures are: higher sales price, the home is better taken care of since it is usually occupied, lower repair, carrying and legal costs to the bank, and shorter time to get the house to market.
Despite the obvious benefits of short sales, banks were slow to encourage them. After years of banks focusing on foreclosures, in the Fall of 2011 we began seeing a shift in their approach. That October, Bank of America offered a short sale incentive program to homeowners in Florida that essentially worked the same way as cash for keys. Now fast forward to April 2012 to see just how much more accepting of short sales banks have become. We have a client with an accepted offer to purchase a Bank of America short sale here in Bend. What makes this deal fairly unusual is that the owner/seller has never missed a payment. It wasn’t long ago that something like this was completely unheard of.
Not all banks have reached the same level of “appreciation” of short sales that B of A appears to have. However, should this trend of encouraging short sales continue, it may help speed the recovery of the real estate market.
If your mortgage is with Bank of America you can find more information about their short sale program at their Short Sale Resource Center.