Lesser of 2 evils: Short sales outpace foreclosures

Banks are agreeing to more short sales, and for the first
time, short-sale transactions are exceeding foreclosure
deals, according to the most recent housing data from Lender
Processing Services (LPS) Inc.

In January, short sales made up 23.9 percent of home
purchases, according to LPS. Meanwhile, foreclosures made up
19.7 percent of sales.
Just one year prior, foreclosures made up the bulk at 24.9
percent of transactions while short sales made up 16.3
percent.

“It’s a fairly recent phenomenon that short sales have
been increasing,” Jonathon Weiner, a vice president with
LPS, told Bloomberg News.

So why are banks getting more agreeable to short sales?
Banks are realizing that short sale transactions usually
sell for higher prices than foreclosures. In fact,
foreclosed homes tend to sell for 29 percent less, on
average, than comparable non-distressed properties. Short
sales tend to sell at a 23 percent discount, according to
Lending Processing Services data from January.

Short sales increased 33 percent in the last year,
according to January data released this week by RealtyTrac.
Thirty-two states saw year-over-year increases in short
sales.