Rise in Short Sales Increases Price of Distressed Homes

2012 saw underwater borrowers turn to short sales by a three to one margin over foreclosures, CNNMoney tells MHProNews. Foreclosures accounted for 11 percent of all sales, a drop from 13 percent the previous year, while short sales rose five percent year-over-year to 32 percent. Noting foreclosures on average in Q4 2012 sold for 39 percent below market value, while short sales came in at just 23 percent below market, the spokesman for RealtyTrac, Daren Blomquist, says more potential foreclosures are shifting to short sales. In a short sale, homeowners sell for less than what is owed the bank, providing they can prove financial hardship, and the bank absorbs the loss. Usually, the bank can get more out of the house from a short sale than a foreclosure. The increased number of short sales helped push bank-owned properties up four percent over the price of distressed sale homes from last year.

(Image credit: news365today)

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