Lenders are now offering short sales as a foreclosure alternative in today’s real estate market. While short sales can benefit both the distressed seller and the lender, they do come with some ill effects for others.
Apples To Apples?
One of the biggest issues short sales bring with them is their effect on neighborhoods. While short sales aren’t as damaging to the value and appeal of a neighborhood as a foreclosure, they can drag down the rankings of other homes.
Areas with high volumes of short sales are finding that they affect appraisals of nearby homes. In other words, traditional sellers are finding that their home isn’t worth what it could be simply due to the comparable properties nearby selling for reduced prices in a short sale. This is especially damaging in areas hardest hit by the foreclosure crisis, such as Florida and Nevada; where the sale of non-distressed properties is resulting in a loss for the homeowner.
Homeowner complaints have begun to flood the offices of each state to review how appraisals are conducted. Concerns are growing about the fate of the housing market and any chance of future recovery if even non-distressed properties continue to take losses.