More Michigan mortgage lenders turning to 'short sales' to avoid home foreclosures
A surge in so-called ‘short sales’ is helping reduce the number of Michigan home falling into foreclosure.
It’s a trend that may eventually help Michigan’s struggling real estate industry.
Pre-foreclosure sales, also known as ‘short sales’, are where banks agree to sell a home for less than what’s owed on its mortgage.
Realty Trac reports there was a 103% increase in ‘short sales’ in the final three months of 2011 in Michigan. Daren Bloomquist is with Realty Trac. He says banks are willing to take a loss on a short sale, because they usually get prices that are much higher from ‘short sales’ than from the sale of repossessed homes, also known as REO’s.
“Significantly higher in Michigan," says Bloomquist, "Over a hundred thousand dollar average sale price of the pre-foreclosure sale…as opposed to an average sale price of about 68 thousand in the REO sales.”
Bloomquist says Michigan has a two year supply of repossessed homes for sale. He says Michigan’s home sale prices will continue to be dragged down until the glut of foreclosed homes on the market is eliminated.