Short Sales
- A Sign of the Times - Part 3

The Denninger Report  - by Gini Denninger

Why would a bank even agree to a short sale? Mike Smith, a Nothnagle Realtor specializing in short sales explains that in NY State, the foreclosure process is very difficult and drawn out. The time it takes to foreclose is double that what it was a few years ago! Before accepting a short sale offer, the bank will calculate what it will cost to complete the foreclosure and what the property could sell for if foreclosed on, in addition to fees for the sale and maintenance of the property. If the sum is more profitable to hold they will hold, foreclose and sell the property themselves. If they calculate they will benefit more by selling as a short sale, they will usually opt for the short sale.

Sellers chose to do short sales once they recognize this is a way out of a property they cannot hold on to any longer. Sadly, many who are upside-down with their mortgages do not realize selling their home as a short sale could be an option to them. They think their only option is foreclosure. Hopefully they learn that short sales are an option before losing their homes. Short sales are far less injurious to a persons credit history than foreclosure. Foreclosures take 200 points off credit scores, while short sales only 50. Also, foreclosure must be admitted by a former owner every time they apply for credit or mortgage. Hibbard, points out that short sale sellers can even buy another home in two years while those who opted for foreclosure, wait five years or more.

Short sales arise from sellers need as well as the buyers and lenders recognition of benefits to themselves when party to such sales. Short sales are not without pitfalls, but as long as they continue to benefit all parties involved, they will become more accepted as part of the real estate landscape. The term “Short Sale” will no longer have strong negative connotations and will become just another tool in the selling of property. Selling as a short sale helps those who are genuinely in financial distress, benefits the banks in that they have less foreclosures and is a boon to buyers like my client Robin, who was able to afford a home in Perinton, that she might normally not have considered. Short sales, while difficult and uncertain are a great way to buy a property in our area as well as nationally.



<< Return to Part 2