I get asked this question all the time, “why would my bank want to do a short sale when they can just foreclose?” The answer is simple when you think about it. Foreclosure is expensive. At the end of the day allowing us to do a short sale is less expensive than hiring a team of attorneys to foreclose on you. The foreclosure can be dragged out for months. Can you imagine paying for attorneys month after month? It sounds expensive, right? Well the lender does not want to pay for it either. You also have to take into account that when they do sell the house on the auction block, they will only get market value for the house. It’s a myth that properties sell extremely cheap on the auction block. Most houses sell for market value with a small few selling at a discount. This is the point in the conversation where I see the light bulbs go off.
The next question is “but how do you get paid?” This is obviously an important question; nobody wants to work for free. Whenever I am talking to a potential client about short selling their house I like to disclose why every party in the transaction is willing to participate in an especially frustrating process.
So let’s break it down: