NEW YORK—Selling homes quickly, before they reach foreclosure, is a growing phenomenon in New York City’s outer boroughs. As more homeowners default on mortgage payments, doing a short sale becomes a more attractive way to sell the home on.
In a short sale, banks write off the difference between the mortgage amount and the value of the property. Foreclosure will be avoided, but the bank will give the default client a deficiency judgment, meaning credit rating is affected.
“Their credit is not something we can save for these folks,” said Christopher Gerstle of United Short Sales. Gerstle spoke at an NYC Network event at The Williams Club Wednesday.
“It’s obviously a very difficult conversation to have with your client.”
He said he works with the broker throughout the process, the first part being a home inspection to find the flaws, then a deal with the bank to write off part of the mortgage debt. A dollar amount is set and the first buyer to sign the check gets the property, Gerstle said.
“Bidding wars are not part of the process.”
Gerstle said his company has negotiated many short sales in Westchester and Long Island, but Manhattan has been spared. They have had a 70 percent success rate in closing short sales, partly due to their long list of buyers.
“People want to buy distressed property and this is distressed property,” he said.
Short sales can close in as little as 45 days, but expect 90 to 120 days, Gerstle said. He said for brokers, short sales can become one of their easiest sales.
“This is a volume game.”
Foreclosure filings throughout the country leaped in the first quarter, according to the RealtyTrac’s U.S. Foreclosure Market Report recently.
Default notices, auction sale notices, and bank repossessions increased 9 percent nationwide from the previous quarter and nearly 24 percent from the same quarter last year. One in every 159 U.S. housing units received a foreclosure filing during the first quarter, the report stated.
A total of 803,489 filings were reported in the first quarter; California, Florida, Arizona, Nevada and Illinois accounted for nearly 60 percent of that figure.
“The entire country is like a 30 percent off, Macy’s one-day sale,” Gerstle said.
