Ron Peltier, chairman and chief executive officer of HomeServices of America Inc., the second-largest U.S. residential brokerage, told the Bloomberg news service on Tuesday that short sales – in which a lender agrees to a sale for less than the value of the home – are now 60 percent of the company’s distressed-properties transactions, up from 40 percent not long ago.
“Banks have become much more supportive of short sales,” Peltier told Bloomberg. “That’s better for the lenders, who have smaller losses on a short sale, and it’s going to be better for homeowners, who won’t have as much psychological distress as a foreclosure.”
There has been a “dramatic shift” in banks’ willingness to sell a property for less than the mortgage balance to avoid foreclosing, he added.
Besides lenders and homeowners, the shift also is good for real estate investors, who can use short sales as a way to purchase occupied properties that may need fewer repairs.
RealtyTrac, which studies the foreclosure market, reported that short sales grew by 19 percent in the second quarter, but foreclosure sales were flat. The National Association of Realtors’ home-sales report for August showed that distressed properties made up 31 percent of sales of existing homes.
Short sales still can take significantly longer than a standard transaction, experts told Bloomberg. But typically, they’re still faster than foreclosures, and the return for the bank is better on a short sale than on a foreclosure.
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