Foreclosure for any individual, group, or business can be a very difficult thing to deal with, especially when the process has started. Even with the increasing trend of commercial loan modifications, there is a rise in short sales commercial properties require. Many business owners make the mistake of assuming these modifications are handouts and then re-default once a lender has agreed to the loan restructuring.
While short sales still have a negative impact on your credit, a foreclosure is avoided in the process, allowing you access to more business opportunities than if the foreclosure were allowed to happen. If a loan re-defaults even after a commercial loan workout, then a commercial short sale can become the next logical option. Lenders are open to negotiations on holding a short sale and forgiving a part of the loan because often enough, the market value of the home will have dropped significantly lower than the value of the loan itself. Selling it now means the possibility of collecting more compared to a foreclosure sale.
Many lenders already have a large portfolio of foreclosed properties being managed. Adding another one is the last thing that they might want, as many of these properties enter the market poorly managed and maintained. Coupled with the cost of foreclosure, a short sale becomes practical because the property is sold in a little amount of time while at the same time preventing the property from flooding and already flooded market.
The impact of foreclosures, shot sales, and foreclosure sales can be very strong, with prices dropping in the real estate industry as more and more of these properties pop up.
