How a Short Sale is Beneficial to a Bank
A short sale is basically a sale that is carried out in the real estate market. There are several scenarios where a home owner falls back on a home loan because of different reasons. In this situation, the bank might move towards a foreclosure and the home owner might come into a difficult situation, not to mention an embarrassing one. However, with the short sale process, there is a benefit to the bank as well as the home owner. Here are the three basic benefits of a short sale for the bank. Banks Get Liquidity: Traditionally, banks have no interest in owning real estate.
Owning real estate for any other purposes other than having their offices can tend to be a losing proposition to the bank, because then they would be bound by various aspects like rise and fall of real estate market, geographical lucrativeness of the real estate, etc. Also, even if they do get the property, it is not always possible for them to sell it quickly or at a price that they would like, because the real estate that they would own would be affected by the same aspects that the other estates in the market are. Because banks do not want to bother with these aspects, they would consider a foreclosed real estate as a dead investment.
A short sale allows the bank to get their liquidity back, with a certain amount of it written off as a bad debt. Hassle-free Process: Short selling is quite a hassle free process, as compared to the mortgage or other kind of processes that can be carried out to get the loan or mortgage back. It is also a process where the bank would get unequivocal support from the home owner, because it solves the problem for both the parties. For example, foreclosing a mortgage is not as simple as it would seem for the banker as well as the debtor. There are several fees and charges that the bank would have to pay for the completion of the process. With approving a short sale, the bank basically saves itself from the vast number of fees and charges that they would need to pay otherwise. Rubs off History of Delinquent Loans for Banks: If you though that loan history matters only for individuals, you are in for a surprise. Even banks do need to keep an eye on the number of bad loans, and they might not be able to do business as they would like to if they have several bad loans.
Therefore, a short sale is a very good way out for the banks, because not only do they get a considerable amount of their loan back, but also clear out their history of bad loans. These are the three major advantages for the money lender bank for going in for a short sale, as opposed to a foreclosure on the loan against real estate. Short sales are not just beneficial for the bank but also beneficial for the house owner. Therefore, more and more mortgaged homes are being sold in the short sale procedure, saving a lot of time and money for both parties.