Pre-foreclosure sales, or short sales, are on the rise according to new national data released this week by RealtyTrac. A short sale is also referred to as a pre-foreclosure sale because it requires a lender’s approval before the seller (homeowner) can sell a house for less than what the seller owes on the mortgage.
Short Sales – No Sign of Slowing
According to the Chief Executive Officer of RealtyTrac (an online market for distressed property), lenders are approving more competitively priced short sales, which lead to more successful short sale transactions. This may be good news for homeowners looking for a plausible solution to get out of their home without strings attached.
In a recent foreclosure sales report, it states that sales of homes that were in some stage of foreclosure or bank owned accounted for approximately 26% of all US residential sales during the first quarter of the year. This figure is up from the fourth quarter of last year when only 22% of all sales were such, and the first quarter of 2011 when they were 25%. According to the report from RealtyTrac, first quarter pre-foreclosure sales were at their highest level since the first quarter of 2009 and pre-foreclosure sales reached 12% of all sales during the first quarter, up from 10% of all sales in the prior quarter and 9% of all sales in the first quarter of 2011.
Lenders may be working off a large inventory of pre-foreclosure homes, making it more advantageous for a homeowner in distress to contact the banks and work on the short sale process. It’s all part of national trend.
“Lenders are approving more aggressively-priced short sales, which in turn is resulting in more successful short sale transactions,” said notes the CEO of RealtyTrac. Banks are becoming more amenable to short sales as the housing slump drags on through its fifth year, as shown by the statistics. Homeowners are also becoming more familiar with short sales and contacting area River Forest and Oak Park foreclosure lawyers to get assistance with this process, instead of waiting for the sheriff to show up with an order to vacate the property. Another reason why short sales are on the rise is because real estate agents may be getting better at selling them.
Credit Realities with a Short Sale
One of many reasons struggling homeowners pursue a short sale involves the credit benefit. For example, FICO, the credit scoring company, notes someone with a good credit score, say 720, may see it drop to 570 to 590 after a foreclosure. A short sale, without personal recourse against the seller, will drop it to 605 to 625. But a short sale without forgiveness has the same effect as a foreclosure.
Of course, a less serious impact on one’s credit is just one of many reasons that homeowners stand to benefit from these sales. In our area, be sure to get in touch with our Oak Park and River Forest foreclosure attorneys to learn more.