Why a short sale take such a long time before closing??

Asked by free98jo, Atlanta, GA Thu Apr 25, 2013

Help the community by answering this question:

+ web reference
Web reference:

Answers

13
Annette Law…, Agent, Palm Harbor, FL
Fri Apr 26, 2013
Free,
Everyone in the real estate business, in any capacity, will share with you endless short sale nightmares. As others have stated, this is a highly complex, totally convultued process that lacks logic, transparancy or accountablility. When ANY short sale is completed, it is a MIRACLE!
-
Too few ever recognise the unseen, unsung, unheralded miracle workers who toil behind the scenes to brign to a closure a short sale for a committed seller and buyer.
-
70 percent of intial short sale purchase offers FAIL because the buyer did not 'hear' or understand when their agent ask them, "Do you believe in miracles?"
-
I went for an eye exam yesterday. That took too long also. The proper expectation is essential when engaging in the "Wild, Wild, West of Real Estate," - Short Sales

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes
Cristi Roe, Agent, Atlanta, GA
Fri Apr 26, 2013
The Banks have been waiting for 5 years to be given Bailout Money from the Federal Government. The monies pretty much have been awarded, now Shortsales are taking only 2 to 4 months. Any Bank transaction has to pass thru many departments for signatures, including outsiders such as inspections and appraisals. Don't feel sorry for the Banks, the painful, disastrous past 5 years were started by the Banks and perpetuated by the Obama Regime.
0 votes
Curly Sue, , Texas
Thu Apr 25, 2013
The lender is losing money. I can't understand why they would want to rush that process.
0 votes
Rodney Mason, Mortgage Broker Or Lender, Atlanta, GA
Thu Apr 25, 2013
Purchasing a home via short sale is not at all an easy process. A lot will depend on how experienced the Listing Agent is and how prepared the seller is.. You can expect for most short sales to take at least 3-6 months from when the seller first contacts their mortgage lender(s). If they have a 1st and 2nd mortgage, they must get approval from both companies. This of course, will lengthen the process.

Short sales have so many ways in which they can go wrong. Many short sales simply never close after several weeks or months of work. This is a fact that every buyer needs to completely understand. If you are purchasing a property and must close by a certain time, then a short sale is probably not your best option.

A lot of the reasons for the fallout depend on the seller. To qualify for a short sale, the seller must submit all of their financial documentation AND prove that that currently have a financial hardship. Many sellers don’t submit the proper paperwork resulting in delays. Some sellers cannot demonstrate the required financial hardship that is required for a short sale approval. If a seller files Bankruptcy during the process, that will cause a delay. There could be unpaid property taxes of HOA dues to deal with. There are countless other things that can and often will go wrong. Some can be overcome, some cannot. No Listing Agent, no matter how good they are, can control every action of a seller.

It is critical to keep in mind that the seller’s lender(s) is taking a loss on every short sale. They must to their due diligence to ensure that the short sale is justified and that it minimizes risk to the lender. There is also a lot of fraud with short sales so that must be invested as well. The buyer are seller re not able to have prior relationship with each other.

A short sale is VERY time consuming for all parties involved. A Buyer’s Agent has absolutely no control in the short sale process. They are solely dependent on the Listing Agent and the seller.

Working with a knowledgeable and seasoned loan officer is critical in today's market. Getting Pre-Qualified is the only way for you to find out your options. To get Pre-Qualified for your purchase, you can submit your request online at http://www.rodneymason.com.

Regards,
Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
rodney.mason@prospectmtg.com
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia with over a decade of mortgage lending experience.

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing.
0 votes
Bonnie Ochoa, Agent, Atlanta, GA
Thu Apr 25, 2013
A quick summary why:
1. Not the banks primary function (as stated by all other who commented)
2. Bureaucratic "Red Tape" on various levels (seller's bank, underwriters, Mortgage Insurance Co..etc)
3. Not a high economic motivation to resolve these quickly unless the $$ make sense
4. High turnover at banks in these departments
5. Overwhelmed by the # of cases to handle
these are just a few..

best to look elsewhere if your life has deadlines to meet.
0 votes
Christina Ha…, Mortgage Broker Or Lender, Morristown, TN
Thu Apr 25, 2013
Unfortunately, banks who have REO's for sale, take long when an offer is made, due to the mere fact that multiple people in multiple departments have to get approvals for each step in the acceptance of a bid. Thus it can take as long as 90 days just to get a reply on an offer let alone a closing. Buyers looking to purchase a foreclosure should keep in mind it can take up to 6 months to close, and should have a back up home in case it all falls apart. Many times the banks will accept less on a property that is a cash offer vs a financing offer for more. It truly doesn't make sense but they, the Banks just want the properties off their books as quickly, and economically as possible. And many times cash buyers like investors aren't asking for seller concessions.

Best of Luck;


Christina Solorzano
CEO & SR Credit Repair Specialist at
Everlasting Credit Repair
http://www.everlastingcredit.com
0 votes
David Herren, Agent, Atlanta, GA
Thu Apr 25, 2013
Short sales take a long time because banks are in the business of handling money, not real estate. They are setup to lend and invest money, not to own and sell real estate. They do not get this, never have, never will.
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Thu Apr 25, 2013
To start with the real seller is the mortgage lender and quite frankly their not motivated and they love wasting time as they attempt to reinforce in their own minds that their "better" than everyone else because their bankers.

The first thing the lender does after receiving the offer is to start investigating the Seller (this should be done before the property is even offered as a short sale, but again the banks arrogance generally prohibits them from doing this and apparently the Federal Government has yet to exert enough pressure on them to make them do the job their supposed to be doing). At least 50% pf the time the sale isn't approved because the truth is the Seller doesn't qualify for a short sale.

The next step is to confirm that there are no other lien holders on the property, and there frequently are. These could be second mortgage holders, home equity lines of credit secured by the house, unpaid state, local or federal taxes, or contractor liens to name a few. All lien holders must agree to the short sale and if any of them refuse to sign off then the deal doesn't go through. Once all of this is done, only then will the bank respond to the offer.

Short sales are anything but short, and buyers who choose to pursue them should understand that it's likely to take between 3-6 months before the sale is approved and that at least 50% of the time they won't be. If you need a home in a specific time frame, you should not pursue a short sale.
0 votes
Scott Godzyk, Agent, Manchester, NH
Thu Apr 25, 2013
Because banks are not required to approve them and therefore the process is not an easy one or one that is the same for all banks. Not all short sales take a long time any longer. It will depend on who the listing agent is, how experienced they are in listing, negotiating and selling short sales as well is if the seller is even approved to complete a short sale and the price is at or near market value. These days we can get a short sale approved in 30-45 days when done right and there is no 2nd mortgage or IRS liens.
0 votes
Charles Bagl…, Agent, Atlanta, GA
Thu Apr 25, 2013
The true seller AKA the lender is not a motivated seller. The lender is simply processing a file. Which means it goes through several departments and within those departments 100s if not 1000s of files are going through same process.

When the short sale is done the people who handle your file just open another file and start the process over. You can get a more detailed answer but the is short and simple unlike the short sale process.
0 votes
Lee Taylor, Agent, Decatur, GA
Thu Apr 25, 2013
Because it is not an easy process and because the process involves many layers of management and many layers of systems and follow up to insure that every single detail is covered in order to write off a large amount of debt.

The biggest delay is usually sluggishness at the seller's lender(s)' loss mitigation department(s) and particularly with the time it takes to assign a negotiator(s) and then prioritize the "file" on that negotiator(s) desk.

Short sales are even slower when there is more than one loan to pay off...

I always advise that short sales will take at least 5-6 months, maybe longer.

Get it now?
Web Reference:  Http://intowninsider.com
0 votes
Fred Yancy, Agent, Woodstock, GA
Thu Apr 25, 2013
The quickest and easiest answer is corporate red tape. The paperwork goes from department to department and there is a time limit for each "process". So let's say at your job you are given a deadline to get something done from your boss. When do you think you will complete that project? On the deadline day, right? So it stands to reason that the bank employees will push their limits as well. Of course, there are a ton of other reasons that could cause a delay as well. Such as the need to "update" information. Banks require the information from their sellers to be current so every few weeks, will require them to send in bank statements, etc. that takes time. Then there is the BPO, if that gets old, they order a new one and everything else stops until they get a revised BPO. To be honest, the process involves so many people that it is bound to take a ton of time. So try to be patient and wait through the process. You will find the wait to be well worth it.

Fred Yancy, Broker
Crye-Leike Realtors
(678) 799-4663
0 votes
Michael Hamm…, Agent, Suwanee, GA
Thu Apr 25, 2013
One of the reasons is that the Lender is losing money on the transaction, in both principal and interest, and likely has to convince their investors to take that hit, free98jo. There could be many other factors depending on your particular situation. You might consider asking your Agent/Broker for an answer as well. Good Luck!

Michael Hammond
SellsRealty@gmail.com
404-538-5499

http://www.georgiamls.com/agentsite/index.cfm?SiteID=HAMMONDJOHNM

http://www.chapmanhallprofessionals.com

http://www.SellsRealty.org

http://www.city-data.com/

http://www.greatschools.org/
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more