With the number of foreclosures on the market at record highs, many troubled homeowners are looking for other options to avoid the damage to their credit and to simply get out from underneath their home loan as soon as possible. They often have a better chance of qualifying for a new mortgage soon after completing a short sale than if they were to go through a foreclosure. In most cases a Bank prefers an owner to do a short sale because it saves them from the expensive cost of a foreclosure.
As a result, there are more homeowners who are avoiding foreclosure by going through a short sale. Last year, short sales accounted for about 10% of the number of homes on the market nationwide. That figure has increased by 2% and short sales now account for about 12% of the homes on the market. In some states –such as Georgia, Michigan, Nevada, California and Colorado - short sales have become still more prevalent.
In California, for example, short sales accounted for about 25% of homes sold in the second quarter of 2011, a 7% increase year-over-year. In Colorado, they accounted for 17% of homes sold (also a 7% increase year over year). Bank of America expects to complete at least 100,000 short sales this year, which is twice as many as it completed in 2009. A Well Fargo senior vice president claims that short sales have increased recently because there are notas many bank-owned homes on the market in some areas, leaving eager buyers to actively seek out short sales.