Why Would A Lender Close A Short Sale?
Welcome to shortsaleshift.com. Minnesota’s top short sale experts, Josh Pomerleau and Sarah Willman are going to discuss why a bank would choose to complete a short sale.
One of the initial comments we get from property owners that are going through foreclosure or starting to miss their payments is “Why would a lender want to do a short sale?”. Often times the property owners think that it merely sounds to good to be true. However, there are many reasons why a bank would favor a short sale over foreclosure. At the end of the day, it saves the lender lots more cash to go through a short sale than to go through a foreclosure.
There are a lot of negative expenses associated with foreclosing on a house. There are lawyer fees. Lots of times the property owner will vacate the house. When that occurs, the lender has to worry about people breaking into the property and pilfering things. Also, the general maintainence of the house is neglected. There are also cases where house owners will damage their property because they are offended with the bank taking their home from them.
The bank looks at it like this. It is a good deal less probable 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 property. Then the property owner can move on under their own power.
Moreover, the bank will have to insure the property from all types of scenarios such as tornados and additional natural disasters. Those costs are also negative to the lender.
At the end of the day that is why the bank would aim to complete a short sale. The lender also wishes to close on the property sooner than they might with a foreclosure. Getting that money from a short sale permits them to turn around and lend that cash out again. So, the time value of money is worth quite a bit to the bank.
Through the short sale process, data show that the lender will obtain 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