Banks are not required to be transparent with the consumer when it comes to selling their Assests.
B-Often it is an HR/Organizational issue as others have mentioned.
But, generally, speaking, they are moving pretty quickly these days. I just closed one that was a nightmare (because of my sellers mostly), and it took 7 weeks for the first approval - that's two banks and sellers that could have responded in a more timely manner. That's not bad.
Unfortunately, as a short sale listing agent, who has dealt with good contracts being declined, or the loan committee decision to be drawn out, there are many factors that are involved in a loan committee accepting the short sale. Much of it is driven by the investor who holds the loan, they are usually the decision maker and dictate as to the % of loss. There is also such a huge amount of back log that many asset managers are facing, they are not staffed to handle the incredible amount of paperwork involved to complete the transaction.
However, banks have made huge leaps in the processing and the handling of a short sale compared to a few years ago. I recommend to make sure your listing agent is knowledgeable in the short sale process and has a good track record of closing them. It's also very important the the buyer's agent is also knowledable about the short sale process and communication is the key!
For additional information on short sales, please visit my website dedicated to informing owners of their options to avoid foreclosure and the short sale process.
I am with you, most people with common ordinary sence would think the same thing. People out there think that they can get a tremendous deal with a short sale, I for one try to lead people away from them. Now we can get a deal sometimes with a forclosure...... a house that has gone past the short sale process and is now in forclosure. I have had success with forclosures, however I would encourage you to look at my site for access to not only the forclosures BUT also every home that is currently on the market in the entire tidewater area. That important site is http://WWW.RONCLARK.US and my personal cell number is 757 754 8498
I hope you are able to work through it and in the end get to closing. Good Luck.
It's not that they don't want to get rid of it, but there are a ton of procedures and paperwork that must be completed. Some listing agents do not get the initial paperwork done until they get an offer on the property which greatly delays the process. I feel that the main problem is that there are no set procedures in place for agents to follow when listing a short sale property. Each bank has different procedures which make it even harder for us. If and agent has sold a few short sale properties, then it does get easier, but it is truly a rough process. The seller has to show a definite hardship to be able to sucessfully sale their property short of what is owed. The seller can slow down the process if they do not get their paperwork back to the bank in a timely fashion and there is paperwork that is continually flowing from the mortgage company/bank to the seller and back and forth. You truly just have to be patient when buying a short sale or set a time frame that is acceptable and if the property does not close in your timeframe...move on. There are so many properties available, so you can find something else. If you really want that property, you will wait until you finally get the approval from the bank. Just be prepared for the bank to possibly ask you to raise your offer as it normally happens.
Good luck! I hope you are able to aquire the property that you want.
Some banks are just overwhelmed with paperwork. I really suspect that's less of an explanation than many people believe. But in some cases, they just can't process the paperwork quickly enough.
Banks sometimes believe (sometimes correctly) that property values will rise, and so the sales price may rise. For example, you may be looking at a property priced at (and with a fair market value of) $100,000 today. Well, the bank may figure that values are rising and that in 6 months that property will be worth $110,000. That's a 10% increase in 6 months, or an annualized return of 20%. That's about 5 times as much as if the bank lent the money out as a mortgage.
Banks would have to record the loss on their books. I'm not an accountant, and the issue can get very complex. But let's say they sold the property a few years back for $200,000. If they approve a short sale of $100,000 and take a loss, that'll show a $100,000 loss. Maybe--for accounting or other reasons--they don't want to take that $100,000 loss today . . . or this year.
Maybe there's difficulty with the title or the loan. With all the robosignings and MERS, it can be very difficult to really figure out who owns or is owed what. Keep in mind, too, that many banks quickly sold off their loans. So Chase or Bank of America--who you might be dealing with--might only be the loan servicer.
Maybe they don't understand the local market. In the example above, the property is worth $100,000 in today's market. But the bank is thousands of miles away. They pay someone to do a BPO (broker's price opinion, like a quickie appraisal) and it comes back at $120,000. They believe the BPO and won't accept your offer of $100,000.
There are plenty of other reasons, too. But that may give you some insight on why a lender's behavior regarding short sales seems so illogical.
Hope that helps.