Let’s review this from the bank perspective, and illustrate why Short Sales are excellent alternative to REO, and why every single bank will always say yes to a good short sale Packet that makes sense to them. REO stands for “Real Estate Owned”. It’s a term banks use to describe a house that comes back to them after a failure to sell it for an acceptable price at the foreclosure auction; Most REOs are then listed by a real estate brokerage for resale on the market.

On average, a bank loses approximately $80,000 - $90,000 for every house they have to take back at a fail auction. This number is up from $60,000 one year ago. The average amount banks lose is certain to rise, as more homes are taken back by the bank. Promoting record numbers of REO’s in inventory, with a processing time varied from auction to listing with a real estate agent.

The amount of time it takes the bank to get rid of an REO tends to increase in this foreclosure crisis, that “lame duck period” for the bank could be around 3 to 6 months. Now you’ve just added another 6 months to the already non-performing asset…a minimum of 10-12 months that the investor backing the mortgage is not getting his money back. But through that time the lender may incur additional costs of insurance, attorney fees, utility service, taxes and commission upon resale to third part;

This is not where it ends. The property goes back on the market, and now it’s sitting there waiting to be sold with thousands of other properties on the market, at a price the bank thought the house was worth before it went to auction, and that price is usually too high due to the excess of houses on the market.  Now we can add another 6 to 9 months before the house gets sold. In reality, the mortgage on this house can go unpaid for 24 months or more!  Now imagine you were that institution wouldn’t you love to find other alternatives that can save you some of the cost.

This is the proven reason why Short Sales are a great alternative for banks. Yes, banks take less than what’s owed on the loan, 24/7 because they get a defaulted loan off their books and they can focus on their job which is to lend. They can also move that money forward into other investments. They take it in the shorts now, but they save money and time in the long run.  It is simple to understand why short sales are the best remedy for the lender. They save thousands sometimes hundred of thousands by doing a short sale instead of taking the property as an REO.

Visit http://www.shortsalesedu.info