The Use of Real Estate Auctions in Commercial Short Sales
Celeste M. Hammond
The John Marshall Law School
affiliation not provided to SSRN
March 26, 2009
Probate & Property, Vol. 23, No. 2, March/April 2009
Recent real estate problems plaguing lenders and borrowers have turned out to be far more difficult and tenacious then anyone could have imagined. With concern growing over the erosion of equity because of carrying costs and falling sale prices, lenders and borrowers recognize that the monthly carrying costs associated with holding real estate when conventional marketing is used will not be recovered through higher sales prices. This phenomenon is especially true in a negative market fueled by oversupply of available properties or a reduction in the number of buyers caused by changes in the credit market. Developers of residential properties have been affected by this trend because of scarcity of construction loans. These problems are likely to be around for some time. Consequently, lenders and borrowers are turning to the real estate auction process to facilitate workouts and short sales to sell surplus real estate inventory.
This is another solution for mortgage defaults; in many instances it is more efficient for both lender and borrower than foreclosure.
Number of Pages in PDF File: 3
Keywords: mortgage default, foreclosure alternative, short sale, real estate auction
Date posted: August 12, 2009 ; Last revised: August 13, 2009