This week, we are looking at the advantages of a short sale over a foreclosure from five different perspectives: Sellers’, Neighborhoods’, Banks’, Prices and the Children. – The KCM Crew
All distressed properties put downward pressure on prices. However, the impact of a short sale is nowhere as drastic as the impact of a foreclosure for two major reasons:
- A foreclosure, in most cases, leaves a vacant house in the neighborhood. Vacant, unmaintained homes have a negative impact on the value of other houses in the area.
- When a distressed property sells, it can then be used as a comparable sale in the appraisals of all other sales in the market including the appraisals of non-distressed properties. Since foreclosures sell for approximately 10% less than short sales, they do more damage on the appraisals of other homes.
A short sale impacts the values of other homes to a lesser degree than a foreclosure.
Tomorrow, we will look at the impact of a short sale compared to a foreclosure on children.