Home Buying in 08859>Question Details

Balaji, Home Buyer in Parlin, NJ

Why do short sales take so much time to settle?

Asked by Balaji, Parlin, NJ Tue Sep 28, 2010

Help the community by answering this question:


The "Short Answer" Banks and their investors don't want to take a loss, also, the buyers are making unrealistic low low offers creating too large a gap between market value and their offer.
0 votes Thank Flag Link Tue May 1, 2012
I could go into a long list of reasons Balaji, many of which my esteemed colleagues have already pointed out but I think ultimately these days there are many banks who are just not set up to handle all the short sales they have pending and the "investors" are overwhelmed. These days it seems like your lucky to get a negotiator assigned and a response from the investor before the property reaches foreclosure.
Web Reference: http://savannahgahomes.net
0 votes Thank Flag Link Thu Sep 30, 2010
Aside from the amount of paperwork...In a short you are basically asking a bank to lose money. This is not an easy decision for the bank. Therefore they consider each short very carefully to make sure it is in the banks best interest to release the lien and/or forgive the debt. If someone owed you money and then wanted to only pay you back a piece of it and have to not owe you anything else, it may take you awhile to think it over also. A good Realtor can help make that process as short as possible. Keep in mind the banks do not have to agree to short the house.
0 votes Thank Flag Link Thu Sep 30, 2010
One of the things that can really mess up a short sale is an uncooperative owner. Especially if it's a rental house. The landlord stops paying his mortgage, but keeps collecting rent. Months later a short sale is approved. Landlord continues to collect rent. Tug of war ensues to get landlord to remove tenants. Landlord stalls with handing in last minute paper work. Landlord decides to declare bancruptcy instead, thereby ensuring him another year or two of rent collection without paying his mortgage. On the high end, owner figures out that all this time the SS is going on, they get to stay in the house! Same scenario: delays in the owner handing in paperwork, stalling. Buyer backs out and seller decides to let the bank foreclosure, ensuring him with the use of the house for longer. THe short sales I've been involved in, owner cooperation has been the deal killer.
0 votes Thank Flag Link Wed Sep 29, 2010
Besides what the others have said which is all true, many times the lender you are dealing with on the short sale is the servicer of the mortgage and not the owner of the mortgage. The owner is an investor who purchased it. They could be another bank, investment group or individual investor. The lender must locate and communicate with the investor concerning all information in the short sale package and the investor must agree to the short sale. All this adds to the time it takes to get any decisions and various issues resolved.
0 votes Thank Flag Link Wed Sep 29, 2010
Lots of reasons. There is a ton of paperwork and red tape to go through; the plans for loan mods keep changing while people try to hold onto their homes; the banks are inundated with requests for short sales; the employees don't cooperate with eachother--most don't stay at their job for very long; homeowners don't send in the complete and/or correct documents.
Basically, it's a nightmare!
Web Reference: http://www.dianeglander.com
0 votes Thank Flag Link Wed Sep 29, 2010
Hi, there is a "workout" package that has to be submitted to the bank. This package consists of all the info needed to process the sale. In the beginning the banks were overwhelmed and if there was one thing missing form these packages it stalled the process. The other side is the banks had to train their people and put a system in place to process all the short sales. That has only begun to happen along with federal incentives and standardized forms. Now short sales can be pre approved, which makes things a bit easier.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
Legends Realty Group

0 votes Thank Flag Link Wed Sep 29, 2010
As everything, the attitude of managers rolls down to his/her employees. I had a problem with Bank of America and upper level management referred me down to a manager who could not have cared less. If employees are sitting with piles of files on their desks and have no incentive to get them pushed thru who makes sure they are on top of things? They just don't have a good system to process shjort sales. I was lucky & finally got someone who cared!
0 votes Thank Flag Link Wed Sep 29, 2010

This issue likens itself to the proverbial question, "which came first, the chicken or.......?"

Banks will tell us there is a multitude of red tape to work through to assure that a clear title goes to the new buyer and that the number of short sales facing them is staggering....they just can't keep up.......

On the other hand, many real estate professionals, attorneys, and other related field representatives agree that it may be a case of them "just not caring."
0 votes Thank Flag Link Wed Sep 29, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer