A decrease in “short sales” could have been why house sales has decreased

Short sales are when a lender agrees to take less than the current value of a mortgage in order to avoid a long and drawn out foreclosure process. Short sales have really become popular in the last year as more and more Americans continue to slip into foreclosure.

However, problems have been arising from short sales. Real estate experts are saying that banks are becoming more and more unwilling to agree to short sales due to the change in mark-to-market rules. The change has given banks less incentive to agree to short sell a mortgage. So, the banks wait for either foreclosure or for the seller to sell for an “unreasonable” offer.

Bankers, on the other hand, are saying that buyers are taking advantage of a bad situation by offering under fair market value for homes. However, isn’t that the idea?

So, since there has been a reduction in short sales, the number of sales on homes has declined. As buyers aren’t able to get the same “deals” on homes as they were just a few months ago, there just aren’t as many people buying. And, as stated in a previous post, credit is becoming harder and harder to obtain…even for some buyers with what is seen as good credit.

It is estimated that 1 in 10 housing transactions is a short sale.

In May, “distressed” sales fell to around 33% of all transactions from the 45% that was recorded in April. Clearing out inventory in the market is the first and most essential step in reducing the fall in home prices. Another important part is to start getting homes off the market with inflated mortgages that consumers simply can’t afford. If this means to short sell the houses, then that is what needs to be done.

However, I feel that banks only see in the short term rather than the long term and the overall health of the economy. If the mortgage doesn’t affect its bottom line in the next few months, then it simply doesn’t matter to most banks.

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