The number of short sales rose again last year signaling a loosening up by lenders and recognition that it is far more beneficial for them than foreclosing while opening the doors wider for real estate investing.
Foreclosures dropped by 255,000 in 2011, while short sales increased by 26,000. Short sales are better for everyone. For the mortgage industry short sales mean far less losses than all the expense that is involved in foreclosures, even if lenders aren’t happy about granting them. While no one may be in the mood to help out the bankers these days in the long run more profitable banks means easier borrowing which will help home buyers and real estate investing companies alike.
Data from Realty Trac has also shown average home sales prices on short sales tracking around $30,000 higher than thier foreclosure counter parts. This means home prices trending higher as short sales become more prevalent which is better for the entire economy, not just the housing market.
A loosening of lenders attitudes towards short sales may also be partially responsible a rise in pending home sales starting in November. New contracts not only jumped up but according the National Association of Realtors the index is now even better than what is hoped for in a normally healthy market. However, it could be another 45 to 90 days before these sales close and help to push up home prices further.
There are many reasons that short sales are attractive for real estate investing and now with shorter processing times they are even more appealing. Short sales mean avoiding cloudy titles on foreclosures due to the robo-signing scandal. Short sales are often still occupied by homeowners at the time of contract so they are normally in far better condition. They haven’t been left to be vandalized and the previous owners haven’t stripped them or ripped holes in all of the walls out of anger.
Short sale deals for real estate investing certainly aren’t too hard to come by either. They are everywhere. With some parts of the country having more than 40% of homeowners underwater, every other person you come into contact with could be a potential prospect and seller. For homeowners it is an easy sell. They get to get out from under a tremendous debt, get a fresh start and will be able to buy a new home sooner and begin to rebuild their credit. Plus of course no one really wants to go through an ugly foreclosure and eviction.