Short sales better for borrowers, lenders, expert says

The foreclosure process is not only damaging to a borrower's finances, but it can be costly for lenders as well.

The foreclosure process is not only damaging to a borrower's finances, but it can be costly for lenders as well. To cope with this development, one real estate expert says it would be beneficial for financial institutions to implement more short sales as an alternative.

The average short sale earns lenders $175,000, compared to just $147,000 when they sell a real-estate owned home, RealtyTrac vice president Daren Blomquist told HousingWire. In addition, the cost to maintain a vacant property once a household is evicted can further reduce the profit of selling an REO home.

Meanwhile, foreclosure activity is expected to increase in the latter half of 2012, he added. However, financial institutions recognize the damaging effect a major influx of foreclosed houses has on the overall marketplace and are expected to change their tactics to compensate.

Instead, lenders could implement a cautious, managed flow of repossessions, Blomquist told the news source. However, with fewer underwater homeowners putting their properties on the market, an increase in short sales and foreclosures could provide prospective buyers with more options.



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