Short sales up as lenders ‘get’ lower overall costs

Banks are more willing to agree to a sale at a lower cost than a homeowner’s mortgage balance in order to avoid having the property fall into foreclosure, which can be more costly for a lender.

In the fourth quarter of 2011, there were more than 88,000 short sales, a rise of 15 percent compared to a year prior. In all, short sales made up 10 percent of all home sales sold in the fourth quarter, according to recent data released by RealtyTrac.

In contrast, bank-owned homes (REO) dropped 12 percent year-over-year (to 116,000), making up 13 percent of all home sales during the fourth quarter.

The average short sale in the fourth quarter sold for $184,221, according to RealtyTrac. The average foreclosure sold for $149,686.

Banks are now more willing to do short sales and that trend will likely “show up in more local markets in 2012 as lenders recognize short sales as a better option for many of their non-performing loans,” said RealtyTrac CEO Brandon Moore.