I can not imagine avoiding short sales as I feel that would be doing a disservice to my clients. Why? Because in the Silicon Valley area they represent nearly 30% of active listings and 60% of pending listings (which many times come back to market).
However, if I did want to avoid them here are some of reasons why:
1.) There are a lot of short sale listing agents that don't return phone calls, do not manage the seller properly to be able to show the home, do not change status when they have a signed offer, and in general do not demonstrate professional behavior during the marketing or contract period of the home. They hand the transaction over to a processor after the offer is accepted, do not keep up with the file in a timely manner, do not update the buyer's agent in consistent manner, do not properly check for liens, do not properly gather the complete package and well...I could go on and on. When you find a listing agent that is professional and on the ball, short sales go quite smoothly.
2.) Some short sale sellers, understandably, are not cooperative. Many have already ruined their credit and they have a misunderstanding that if they don't show their home, they will be able to stay in the home for longer time and not pay rent/mortgage. They feel like they have nothing to lose and believe that as long as their home is simply listed they can somehow get back at the bank with not paying the mortgage and living "free". Therefore, they make the showing- appointment only, don't have a lock box, only show between 1-2pm on Mondays etc. etc. etc. They also do not worry about the presentation and many times, almost seem to make it look worse so it won't sell. Which is simply not smart. The lower the offer is for their home, the less likely the short sale negotiator will accept the offer and on and on we go. Don't get me wrong. I know this is not true for all short sale sellers. I can only partially understand the stress, the shame, many feel during the process of losing their home. But the ones that make it difficult to show and sell, hurt the whole market.
3.) Short sale lenders employing entry level workers to screen, screen, screen, a file before it ever gets to someone who can make a decision. The only way to get through the line is to simply keep calling, keep being nice, keep responding to their request as fast as possible and eventually elevating it to someone who can make a decision. The process is getting better and short sale approval times in general are getting shorter and shorter ( no pun intended) but there is still a long way to go, especially when there is more than one lien on the home.
4.) Escrow officers who do not check and double check their work to make sure that all liens are identified in the title search, that the HOA delinquency demands are timely, that the HUD is as accurate as can be so that when the approval comes in the deal is not short. Equal responsibility to the listing and buying agent to double check the HUD, and know the liens, the fees, the back taxes, the cost of HOA documents, the garbage lien, and anything else that can surprise all involved. It takes a good negotiator on the listing agent side to go back to the short sale negotiator when an error has been made on a HUD to get it corrected and not let it simply fall into the "Who's gonna pay for this? " category. There is nothing more frustrating to be at the closing table with a client and find that "whoops" there is an $1000 more HOA fees than was calculated. Again, these task are not easy ones to keep up on and we generate many HUDs during the short sale process, but it is absolutely critical that "ALL EYES" be on board.
4.) Reduced commissions are common in short sales and the work load, stress, and number of times that an agent will contribute more commission to the deal to make it happen is more often the case than not. Every single short sale has its own oddities and they are not transactions that can be put on auto-pilot. There have been lots of courses out there for "certification" and many are good basic courses. However, what it takes to complete a short sale transaction and make it happen well in the least amount of time is attention to detail, organization, politeness, commitment, and a sincere dedication to the clients to stay on top of things for the clients' benefit.
5.) Finally, buyers who think that writing offers on multiple houses is a smart way to beat the system and agents who write those offers for them. It is a waste of time. It pushes sellers closer to foreclosure by eating up the clock while the buyer continues shopping for the next best deal. I recognize that many buyers wait a long, long time and finally give up. Don't get lured into the multiple offers, under market priced short sale listings. Find a solid well cared for home and make a good offer. Short sale or not.
My $.02 short a $1.00