3 Reasons New Short Sale Laws Assist Both Home Owners And The Bank!
If you saw “60 Minutes” this weekend you know some banks are in big trouble with the methods they have used to foreclose on delinquent loans. Well now major banks may be forced to let severely delinquent homeowners sell their houses for less than the loan amounts owed as part of a broad settlement of federal and state investigations into botched foreclosure paperwork.
For the distressed real estate investor this is great news. Since the ugly head of some banks’ unethical actions began to appear last fall, short sale approval has skyrocketed. My personal research shows the more unsaleable a property is the higher chance of an aggressive short sale price being accepted.
There are three basic reasons this is true:
The bank is no longer comfortable they will be able to receive clear title post foreclosure. A short sale is a title guaranteed sale with a grant deed. Good for both the bank, the seller and the investor.
Properties with heavy deferred maintenance cannot be sold without either additional rehabilitation costs or deep discounts to cash buyers. A short sale allows the bank to sell to an investor without flooring a dilapidated liability.
Previous bank culture considered a short sale a negative. Laws which force the action will remove the stigma and the banks will actually realize it is cheaper to short sale. Investors will find even more streamlined roads for cash purchases.