What percentage of Short Sales Actually close in your Area?

Asked by Mr.P, Arizona Mon Jan 28, 2008

What percentage of Short Sales Actually close in your Area?
How to answer.
in Arizona it is my opinion that 2 out of 10 close. Therefore the other 8 go to a trustee auction

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Jim Walker, Agent, Carmichael, CA
Wed Feb 6, 2008

2 out of ten? 20% ? - You smiling optimist !! ;-)

I ran the following analysis back in August 2007, If I get time I will run it again; I don't expect huge changes. The percentage that I got back then was 16% I believe my sample size of 3885 listings
( 3350 failures + 535 successes ) was large enough to be statistically useful.

August 24th 2007:

I ran this analysis which estimates the percentage of short sales listings that sold The data base was from listings whose sale, pending, withdrawn or expired date was in 2007 Area: 7 major counties covered by Metrolist Sacramento Valley. Active listings are mentioned only as reference point; I did not predict the percentage of active short sale listings that might succeed.

Date of the analysis was August 24th, 2007:

- There were 1083 active short sale listings; 1975 listings were withdrawn and 785 expired since the first of the year, 55 were temporarily off market. There were 213 pending short sales, 29 were expired pending and there were 293 closed short sales. If we assume that all the pendings and expired pendings eventually closed, and assume that none of the expireds, withdrawns and temporary offs sold,
then the ratio was 3350/ 535.----16% sold, 84% did not sell,
or about 1 in 6 got sold.

If a lot of the pendings fell out of escrow (likely) that ratio could be much worse perhaps as bad as only 1 in 7 or 1 in 8 -

I only used the off markets, expireds and withdrawns. my ratio was: 1975 + 785 + 55 = 2815 / 535 That ratio is to 5.26 failures to 1 each pending or closed escrow.
Or 16 out of 100 short sale listings sold or went pending as short sales.

As for the percent that fell out of escrow, that statistic could be obtained from MLS data but would require hand sorting or special software. My personal anecdotal experience in the nineteen nineties was that one out of five short sale escrows closed. After the 4th burn, I managed to dissuade subsequent buyers away from short sale listings and eliminated them from search results disseminated to my buyers. My professional opinion was that avoiding entanglements in short sales was in the best interests of buyers that I represented.
1 vote
Dan Therrell, , 36532
Mon Feb 25, 2008
Short sales are rare in south Alabama. It seems most lenders would rather foreclose. That said, I just closed a short sale last week. It was a frustrating process for all involved, including my client. The lender did not accept the full price offer until 3 weeks had passed. Then they closed the office that we were directed to deal with and transferrred all the files to another state! Then the title company found a sizable undisclosed tax lien.

In spite of all this, we got the transaction closed with 30 days of the accepted offer, due to a lot of follow-up by the listing agent and title agent.

All in all..I would chase another one, if I prepped my client for the roller-coaster ride!

Dan in Fairhope, AL
1 vote
W. Todd Hess, Agent, Huntsville, AL
Mon Feb 25, 2008
In my experience, just getting a lender to call you back regarding a short sale is very difficult. Most often, loss mitigation, assets manager, etc. just simply won't return calls. I've even had some lenders say, "Sorry, we aren't interested in doing a short sale. We are going to foreclose and put it on the market."
1 vote
Jim Walker, Agent, Carmichael, CA
Fri Feb 8, 2008
Thanks for the BA -

I linked below to an article in Broker Agent News by Steve Stovall. He gives a pretty good description of the short sale process, seller, property, paperwork, and buyer requirements

In my not so humble opinion ( imnsho,) ) The reasons why the failure is above 80% are:

1. Many sellers don't qualify, they think that being upside down and hating it is enough.
You must also be undergoing hardship not of your own making. such as illness, unemployment or natural disaster. Stovall gives a few other reasons.

An investor who made an unlucky or foolish investment, can't expect relief from a short sale.

2. Prospective buyers think that these are bargains, so very few buyers offer close to full market value.
The banks will not approve sales at huge discounts, tiny discounts: yes.

3. The wait, 4. the paperwork, the wait 5. the anti-buyer addenda, the long wait 6. the uncertainty of the sale, still waiting 7. the perception, if not a reality, of bad faith dealing by the bank loss mitigation managers.
1 vote
thinz, Agent, Allenhurst, NJ
Wed May 20, 2015
It is now 2015 and for the past 8 years or so, the % close for cases we've represented is a little over 90%. The #1 reason a short sale did not close is the buyer expectations were not properly stated to the buyer by the realtor. We get the highest and best price out of the gate, and when we receive a counteroffer from the lender, the buyer rejects and eventually withdraws. #2 - the buyer does not do their due diligence on the front end regarding the property condition, #3 - (and now becoming #1 as we've corrected the prior two issues...) the lender is coming back with an unrealistic BPO value that warrants a longer negotiation period and the buyer gets impatient and withdraws. Case in point - just look at how many foreclosures Ocwen has on their books that they manage...We could have closed most of them and saved them a ton of money so they can start writing more new loans...but the decision makers at the lender do not understand how to manage the short sale process for the best possible outcome...period. If lenders would stop thinking they can get more and realize this one thing - they will increase revenue and cut expenses by negotiating a short sale today with a reasonable offer vs foreclosing and selling for likely less at auction down the road. The numbers don't lie! Just some insights on my discussions that have gotten us to closing! Good luck. Tom Hinz
0 votes
csr, Home Buyer, Benson, AZ
Sun May 12, 2013
Purchased a 'short sale' property at the offered and advertised price, did the homework and put 10% down, seller and her agent signed the contract. Later the seller wanted an additional 10% on the 'selling price', I needed a home, I am 70 and retired on SS, and this fit my needs. Seller and her agent signed the new amended contract and her agent give me a 'Closing Date', assuring me that all was approved. I then put my home for sale and purchased a moving van, and sold off all my excess property in an effort to increase my net-worth and 749 credit score. My house sold, I packed it out and moved to relative's home in AZ, waiting for the April 13, 2013 closing in Nevada. Two days before closing, they backed out and said that the lender was going to 'Foreclosure', leaving me high and dry. It is now May 12, 2013 and the house is still being advertised all over the MLS for the 'ORIGINAL' selling price.

Thus. two questions. One is how many 'deposits' can a seller accept on a 'short sale' home. Seems to me that this home is being used by the RE's as a 'bait and switch' or has nearly 200 offers on it, each with a deposit of 10%.

Second, since it now appears that the 'seller and her agent' had no authority to offer the house at the 'short sale' price, is this fraud? They lied about the 'Notice of Default' and misrepresented themselves as being the 'sellers', and having authorization, pre-approval, to sell at the listing price.


Thanks.. Out $18,000 over this mess.
0 votes
This is the issue #1 I described in my previous answer...It is critical as the buyer to not put your highest and best offer to start the short sale process...Unless there is a lot of activity on a new listing where the list price may be get bid up, buyers need to offer lower than the advertised price knowing at the start where the cap will be in the counteroffer process...very important! This is especially true for home that have been on the market for a longer period...Tom Hinz http://www.shortsaletosell.com
Flag Wed May 20, 2015
Glen Bigness, , Naples, FL
Thu Feb 4, 2010
In our area I have 2 Short Sales at present looking to close. One is at 6 months and the other is now in the eleventh month, and still holding! The lenders are the problem indeed- with a lack of response and action in the deals. With the frustration many buyers simply give up and walk away to look else where, and in some areas the prices are now actually going UP, so they do not want to miss the boat on low prices in an otherwise expensive market such as Naples FL.
The loss mitigation departments are still way to slow to even respond to an offer that was submitted and many buyers think that placing a deadline for response will work- which it does NOT.
we do everything we can to try and make the Short Sale process a smooth and efficient one, preparing the buyers and sellers for what is to come.
we all hope that somehow this will go much quicker and shorten the time to get this inventory OFF the market so all property owners will not continue to suffer...
Collier County Florida was worst hit in areas like Golden Gate Estates and Golden Gate City, Lee County Florida found Cape Coral and Lehigh Acres effected the hardest for Short Sales and Foreclosures!
0 votes
Ben Benita, , Gainesville, VA
Tue Dec 22, 2009
Our closing percentage is just over 60%....we have been successfully closing short sales for the past 4 years (went through it personally and now help others). The KEY TO CLOSING THESE "wonderful" things is knowing hte right people at the banks. Get a decision maker and you will get answers. Contact me anytime with questions -- Ben Benita, http://www.United-IG.com and http://www.Brickstone-financial.com, BBenita@comcast.net, 703-754-7551
Web Reference:  http://www.United-IG.com
0 votes
Jennifer K G…, , Canton, GA
Thu Mar 27, 2008
Wow this is a great question in these trying times. 2 out of 10??? I think that is generous considering the banks usually wind up screwing everything up. I'm 0-3 this year with short sales, so I'm probably the wrong person to answer this question! LOL
Web Reference:  http://www.jennsellsfast.com
0 votes
Portland_Rea…, , 97236
Sat Mar 1, 2008
Not to many in my Area, but as the inventory increases I think I will get better.
0 votes
Dane Drake, Agent, Tuscaloosa, AL
Sat Feb 23, 2008
I think between 15 & 20%, and I think that is being positive. It is at times frustrating.
0 votes
Mr.P, , Arizona
Fri Feb 8, 2008
Great analysis.

Yes 20% is Optimistic.
I am looking for a change in Short Sales. In my opinion if the banks are going to start doing them, it is now.

After reading your post I crunched the numbers in AZ again. I have to search our MLS by remarks. Individual areas. Individual solds.

It is worse than I thought, However now I have the actual numbers to show my clients.

"Statistically useful." No not really.

There must be something more to Short Sales than just a late night commercial?
0 votes
Dtj, , 31558
Tue Feb 5, 2008
Hello Patrick, sorry not to have noticed your post till now.
Even though I have a small area this is one stat that I don't try to keep up with. Either you get the house your working on or you don't. The length of time a Short Sale completion takes (usually 5-8 months) its nothing you depend on for cash flow.

Because of how the banks and mortgage companies have (not knowingly?) taken the Equity out of most all houses currently in foreclosure here in SE Georgia Short Sales are not viable options.

Where I am there has been alot of new building so 90% of the houses in Foreclosure were built less than four years ago. With the banks and mortgage brokers all directed to sell their "product' (95-100% Loans that jack up percentage rates that escelate the monthly payments above the local rental rates- teaser rate ARMS etal. The banks brought this upon themselves.) and not to push conventional 30yr fixed loans. This problem we have today was completely foreseeable, all we could do was hope it wouldn't turn into what it has.

You know as I do Short Sale & Pre-Foreclosure deals are equity based, when there isn't any equity and the amount you can create in a depreciating market doesn't justify getting involved you look to other markets.

So, if I could take a rain check on answering that question when we are in a more "normal" market. I'll have better input for SE Georgia.
0 votes
Mr.P, , Arizona
Thu Jan 31, 2008
Out of 10 short sales, how many close in your area?
0 votes
Dtj, , 31558
Mon Jan 28, 2008
Hello Patrick; This is best answered on an individual basis. The amount of success a person will have in Short Sales is directly related to how prepared that person is with the paperwork and continued relationship with the different loss mitigation personnel with the different banks.

It may come as a surprise but recently on a Short Sale I was doing instead of waiting for my overnite package to come to him (the loss mitigator) he was ready for me to make an offer right over the phone and then prepare my paperwork accordingly to our conversation.

Definately a sign of the times were in, shows how desperate these banks are right now with too, too much property taken back by them through foreclosures.

Think about it. They are essentially cutting the RE Broker out of the picture if it were to be listed, with making deals and decisions in minutes, which ends all chance of a brokerage getting that house as an REO. But then again there are so many the brokers will hardly feel the difference.

Be prepared and fast!!
0 votes
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