Short Sales Done Right Can Move REO!

Implications: Defaulted mortgages that transform into REO will hemorrhage the budget of any lender or servicer who cannot liquidate the parcels with dispatch.  Short sales represent one more tool available to property managers,real estate professionals,and homeowners faced with must sell properties in an all but dead market.

Analysis: Short sales are legitimate alternative transactions that should be considered as increased foreclosures add to the heap of REO inventories. It is, however, crucial that all parties involved understand the details of the entire process. This includes the lender-servicer, borrower, Realtor, title company, and, of course, the prospective purchaser. Lenders, especially, must understand that the price point on a short sale is the real market value of the property at the time it is offered. It is not the figure that would move the home at a foreclosure sale.

Short sales take time to put together. Appraisals, BPOs, ad valorem tax lien checks, and site inspections are all requirements in the verification chain. Problems do occur in these transactions when buyers submit unrealistic offers well below the market value of the parcel or second mortgage holders are uncooperative. Open communication is key to everyone involved with the short sale and will do much to leave all at the closing table feeling treated fairly.