We all remember the real
estate crash, or as some would put it, when the housing “bubble” burst… that
event which spiraled the United States down into the recession. Thousands of
people lost their jobs and their homes, which means banks lost money.
Foreclosures were everywhere.
During this time, as
foreclosures took over, banks began to realize the amount of money that was
being lost. Not only did they have to own the property, but they had to
maintain it, pay taxes, insure it, protect it from vandalism, winterize it,
preserve its value, all while trying to sell it in a market that was rapidly
declining.
Now, fast forward several
years, we are stabilizing the housing market. Less and less people are losing
their homes, and it seems that the U.S is starting to emerge from the deep
recession (a quasi-depression). So, what did the mortgage companies, lenders,
and investors, learn from this incident? They realized that foreclosures were
not the best option, and that their far better alternative was a short sale.
If you look at the trends
of short sales throughout the U.S, you will notice that Florida, ground zero
for the housing bubble and later market collapse, was one of the first states
to start utilizing this technique. Gradually, the Midwest started using short
sales, and before you know it, the entire U.S is in a short sale frenzy. In the
midst of all of this, the “new normal” was introduced.
As the short sale trend
continues, the U.S real estate market is seeing their value and shying away
from the typical foreclosure procedure. Banks are acknowledging that in the
current economy, it’s not in their financial interest to do a foreclosure. A
short sale gets the property off their hands quick… banks can quantify their
losses then (not 12 months later in the REO market) and gets the homeowner on
with their life, with a softer impact on their credit.
So, this essentially means
that we have developed a new housing market and the real estate business is
changed forever. It is highly unlikely that banks will ever go back to
foreclosures alone. Now that banks have more resources needed to execute a
short sale and more real estate professionals have become more educated on how
to handle the process, short sales are here to stay.
Some
would say that we are coming out of the recession, yes, but not without several changes. If there is one major thing
that the recession has taught us, it is that there are better ways to handle homes
going into foreclosure. Short sales are now the “new normal” and I think we can
all agree, it’s a new normal that we all would prefer.
For more information on short sales, visit www.kayserlawfirm.com
The choice of a lawyer is an important decision, and should not be based solely upon advertisements.
