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10 best cities to buy short sale homes

5. St. Louis (29.6 percent)

Jim Young/Reuters/File
The Gateway Arch is seen in St. Louis in this file photo. Buyers can get short sale homes for less than $100,000 in the St. Louis metro area, at a discount of 29.6 percent below market value.

  • By Schuyler Velasco Correspondent

The St. Louis area has by far the cheapest housing market of the short sale metros on the Top 10 list. Nearly 600 pre-foreclosure homes were sold there in the fourth quarter of 2011, at an average price tag of $96,131. Short sales made up only 5.7 percent of home sales in St. Louis (the lowest proportion on the list), but short sales increased 19.9 percent from 2010.

If short sales, in most cases, are a better deal for both the homeowner and the lender, why did banks and other lenders take so long before encouraging them? "There are a lot of obstacles to a short sale, because it's more of a complex transaction," Blumquist explains. "It involves three parties: the new buyer, the homeowner, and the lender. Foreclosure is more standard. Also, the lenders were intrinsically resistant to letting those homeowners off the hook. By agreeing to a short sale they’re forgiving the debt, which is not in their DNA to do. That's also why you see resistance to loan modifications."

Furthermore, he adds, before the housing crisis, a a short sale "was not really standard opera†ing procedure in their guide for what to do when a homeowner stopped making payments."

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Mark Sappenfield
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