Monday, September 08, 2008

Short Sale - Long wait!

Short Sales can be a good deal! No question about it! Beside wanting a great property that is what every buyer wants: a great deal! Therefor it is no surprise that many buyers go for a property that is a short sale. In case you do not know what a 'short sale' is: A short sale is a sale in which the lender has agreed to take less than what is owed on a property and the borrower can prove that the market value now is less than what is owed and that the borrower will (or already has) probably default on his mortgage payments if the property is not sold shortly.
There are two different scenarios: 1. The Bank agress on a price that they will take. 2. The lender agrees to possibly do a short sale and lists the property for a very marketable price that will attract buyers. It has to state in the Listing agreement that this is a short sale and is contingent on the Lenders approval if an offer is accepted.
So, you don't care of it takes some time ... you have time. So what if it takes a couple of months. But here is the problem: most of the time it takes much longer than a couple of months. I have had a short sale under contract now for 7!!! months!
I am lucky and have some very patient buyers but a lot of time buyers get fed up after three, four months; especially when there is no light at the end of the tunnel.

The process is even more frustrating for the seller, as the seller might have a good offer that the lender would probably take if somebody at the bank would simply look at the offer, do some research and get the ball rolling and stay on it until closing. You would not believe how many short sales are under contract! It is not seldom that the bank is finally ready to accept a deal ... but the buyer has grown impatient and gone on to another property. It is also not uncommon that a property is being offered as a short sale, a good offer -or even several good offers- are on the table, time passes and since the departments at the bank seem to do a rotten job of communicating amongst each other, the property goes into foreclosure simply because the time frame is up and after non payment of mortgage payments for so long, the property will be foreclosed on while there is a buyer ready to purchase the property.
It is very frustrating and you should be aware of that if you are looking at short sales.
I am not saying that you should not look at Short Sales or not make an offer but if you do: It is a process that takes a long time.

1 comment:

Anonymous said...

This is great info. Thanks Rich.