Real Estate Blog - WHEN YOU SEE A STATISTIC THAT STATES THAT ONLY 10% OF SHORT SALE CONTRACTS CLOSE, BELIEVE IT!

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WHEN YOU SEE A STATISTIC THAT STATES THAT ONLY 10% OF SHORT SALE CONTRACTS CLOSE, BELIEVE IT!

Contract offered by buyer - January 25th Red Flag

Contract accepted by seller - January 29th.

Wait, wait, wait.

Addendum from bank 2 weeks later on a Friday with 72 hours to accept.

Counter-offer received from bank 2 weeks later.

Accepted by buyer in 2 hours.

Wait, wait, wait, wait.

Approval letter from bank 3rd week in March, wrong amount.

Wait, wait, wait, wait.

Second approval letter received today, must close by April, 24th.

Inspection scheduled for Friday. termite

Termite scheduled for Friday.

Appraisal ordered today.

Earnest money deposited today.

Trying to get HOA docs.

Are there any more Monkey Wrenches that the banks can throw in??

Do my buyers and I intend to close on the 24th??

You bet we do!

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 04/15/2009 02:56 PM

Comments (49)

Short Sales in the Sales Strategies / Tactics Channel

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49 Comments on WHEN YOU SEE A STATISTIC THAT STATES THAT ONLY 10% OF SHORT SALE CONTRACTS CLOSE, BELIEVE IT!

APR

Oh Man - I get this! We close about 90% of the short sales we get an A/O on but certainly that number can fluctuate! We got an approval letter on the 14th requiring a close on the 20th - whoops no appraisal or anything yet! hang in there!

Well at least your going to closing and yes the buyers do have to scramble. We had one turned down last week on a 89,900 condo that our buyer offered 85K CASH on.

Now never mind it is a condo community that can't get FHA financing, in the City so it can't do Rural Home Development.

Crazy, huh?

NO STUPID.

Yes, short sales can definitely keep life interesting...and frustrating. Sounds like you are making it happen though and being the perfect mix of patient and on top of things. Good luck!

One of the largest lenders advised us that only 5% of their short sale transactions were reaching settlement. They advised that we should be spending our time and efforts on the sale of REO properties.

They threw everything but the kitchen sink into these. And the banks think they should be selling real estate? Doesn't this prove that they can't?

Good luck that it all falls into place after your buyers (and you) have waited and waited and waited and now need to scramble to get it closed. If anyone can do it, you can.

Good luck. Is the bank also charging a fee if you do not close by the 24th?

Becky. That's insane. You can't deposit earnest money, do inspections, etc. until the 3rd party contingency is satisfied.

Lenders and appraisers are tied up with refinances. Fortunately, I can pull it together, but this is insane.

Maureen. Thanks. I'm moving some mountains, but it's not easy. Too many outside forces, like my buyer's bank is using tellers in India.

Ruthmarie. Indeed. Everything that the banks have done in the past year is just more evidence that they don't know how to sell real estate.

Roy. I believe it. I believe it.

Jenn. My buyers have been the soul of patience throughout this entire nightmare. I gave them a sysopsis of what could/would happen in the beginning and they now see that everything that I warned them about did, indeed, happen.

Missy. That is the kind of property that will go to foreclosure. The banks have absolutely no clue how to sell real estate.

Becky. I've cleared my schedule and we are totally focused on getting the job done.

I sold these lovely folks their present home 10 years ago and they are relying on me to get it done.

Good luck Lenn. For me, I've grown so frustrated with short sales that I mainly focus on bank owned if the clients want to go that route. Trying to get it done with the banks these days has become extremely difficult.

Lenn, I would have absolute faith that you will get the job done, if it can be done. Another example of banks ruling what they don't know about and expecting the world to jump at their beck and call. And we do. I think its sad. just sad.

That's the positive mental attitude needed to get these deals closed! It's always a hurry up and wait proposition. Good luck.

I've had really good success with short sale listings. I had one that didn't close last year (or was the two years ago...) but it wasn't because we couldn't get it done...it was because there was an unknown lien on the house that wasn't known about when the bank agreed to the sale. We didn't discover it until about a week before closing and so they refused to pay the lien and foreclosed.

The wait is the absolute worst! I don't understand why it takes 30-45 days just to scan in a contract and assign a negotiator. How about "while I have you on the phone, let me email you the entire package including the HUD-1 and you can look it over and make a preliminary decision". LOL!

Stuart. The pressure with foreclosures is coming from investment buyers around here.

Laura. You must also have very wonderful buyers.

Gail. Sad is what it is. They just don't know what they're doing.

Ron. We have pretty good luck too because we understand the process and prepare our buyers. This is one I happen to be handling myself, therefor the acute interest and report. I've lived every minute of it.

Lenn--I encourage buyers to find REOs which seem to be easier to lock down and better prices too. I know you will do everything possible to make the date for your buyer. Good luck!

Lenn, Imagine how many buyers enter the process without the benefit of knowing what might happen.

Lenn, of course, we will all be waiting for the sequel to this one!

Boy do I know this one!! Hurry up and wait type of deal!

I would recommend Bank Owned as a quicker solution, if you can direct the client that way. Most of the leg work is normally completed and their are few outside forces that effect the transaction. Such as BPOs.

Joel and Teresa. I believe the best home is the one that is the best home. I wasn't thrilled to write on a short sale. I know he aggrivations and pitfalls. However, it was clearly the best house.

Jeannette. Indeed. We wait and wait and wait and when the bank wants something, it's overnight.

Pat. There is a lot more to the story, but . . . . . not until we close.

Barb. I make sure that my buyers know the worst that can happen in any purchase.

Teri. We looked at many foreclosures, but the best homes and best prices are short sales around here. You just have to get through it.

I have handled short sales, but they are so maddening. Why cannot someone answer in a timely manner?

Lenn, your own competence and determination will up the percentage of short sales that close, provided the bank cares. Definitely, a sequel, with a video of your happy dance at the closing.

Amazing... What a fascinating conversation. I am quite happily parked here and looking forward to the update on this one. :-)

If anyone can bring a transaction to closing, it is Lenn Harley! Good luck on meeting your 24th date!

Lenn...

I still don't understand this "hurry up and wait" attitude of the banks. At least this one sounds like it will close!

Lenn- Good luck with it. After I explain all the pitfalls, many of my buyers tell me NOT to show them short sales

Lenn,

Getting a short sale to closing in this decade...Priceless!

Hi Lenn, This is wonderfully well chronicled. Glad you wrote it and it helps better to illustrate the short sale issues that consumers are required to endure and in my opinion so needlessly. Way to stick in there.

APR

William. Thanks. These transactions are agonizing to any agent who knows how to manage a real estate transaction. The banks are completely contemptuous of the agents and the consumer.

Brenda. Thanks. You are right on target.

Carol. Indeed. Our agents are very careful to warn our buyers of the frustrations that are bound to be coming.

Richard. If this one doesn't close, you'll hear some very loud noise from Maryland.

Margaret. Thanks. Sometimes relentlessness will pay.

C. I will probably not be able to relate the entire story, but I'll publish some tidbits.

Laurie. Thanks. This one would have tested the patience of Job.

Erica. Because the banks have no clue how successful real estate transactions work.

Lenn, compared to some of my short sales, this one looks easy.

Short sales are more work and the banks are pains. I don't avoid them however, it a large percent of the market.

I do avoid them. I am not going to make 10 offers to get one closing. Someone else can have them all. I dont do short sale.

Lenn,

I know it's making you crazy, but then again, I know you'll pull it off!

Mike in Tucson

Mike. Thanks for the confidence. The only entity that could cause this to fail is the lender.

Laura. Sadly, the short sales are, in some price ranges, the very best properties. We have few owner sales because of the presence of negative equity. It's either a short sale, a forecllsure or an overpriced listing.

Mark. Here too. I will admit that I will, in the future, have more ammunitiion to counsel buyers about the pitfalls of trying to buy a short sale.

Gabe. Same with some of the agents in my network. In fact they usually go through 3-4 before they even get a contract.

Lenn: You are so clever, love the wait, wait, wait. I wish we could make the banks wait.

We had an offer on a foreclosure last year that went on with this same scenario until the contract expired and we found the buyer another house. In fact, I think that same house is still on the market.

Lenn - good luck. Closing in 3 months from what I have seen is not too bad. But then you HAVEN'T closed yet. Sounds like the typical path. Any more monkey wrenches? Oh I imagine you can think of a few.

Jeff

Lenn - congratulations in almost being there! As we have said before, this is yet another example of why banks do NOT belong in real estate. They are abysmal at negotiating and moving the process along.

Similar to Missy, I had a cash offer of $640,000 turned down flat last summer on a house that had $715,000 owed on it. Wait, wait, wait. House forecloses. House comes back on market in February and sells for $525,800. Can you believe it? Of course you can!

Sandy. Typical. The banks could not do a worse job if they tried. Sometimes I believe that they do try to kill the deals.

Jeff. Indeed. My buyers are doing Yeoman's work to get their docs and money together. Home inspection, termite tomorrow. Cross your fingers.

Frank and Sharon. If the banks tried to get into real estate now, anyone who proposes it should be laughed out of town.

I can dig it. We're scheduled to close Monday on a short sale I listed back in October. Got a great offer in November and the bank didn't approve it til March. Tic Toc Tic Toc. I'm looking forward to putting it behind me.

Lenn - January to April............how did it go so quickly?

Banks stink! I am so over them right now. uh oh... I feel a blog post coming on.....

Lets just hope that your buyer's lender doesn't want an updated appraisal -- that comes back with a lower number than the contract price. Good luck!

I'm with Miss Caulk -- we submitted a $170K cash offer on a $179K listing and after TWO months were were denied. I have another one (with Countrywide) that we started on January 7th -- we are at week 13 or 14 and STILL haven't received an update from the negotiator.

APR

Patience on everyones part is all a factor in Short Sales... and persistence on the Realtor's part... and even when the Bank says call back tomorrow during business hours ... hang up and call back again ... just last Thursday, evening ... I was trying to put a HALT on the SALE, it was going to happen Friday Morning, April 10th at 10:00 ... and it had not been halted yet ... it was approx 4:30 PDT when I began making my calls today ... and I was callingTEXAS ... the first call ... I talked to six different people, giving them all the SAME information, the final lady put me into a voice mail ... where I left a message ... again ... and then when I hung up ... I decided I had to call again ... and after 4 times of relaying all of the answers to the same questions again ... I got a hold of Trey ( I told him 'Nice Name' when he told me his name ... I think that was the clincher! ) and I told him the situation and he asked me to FAX the paper work to him directly and he promised he would review it ... and he told me I could call him back in 20 minutes ... I asked him what time it was there he said approx 7:35 ... I asked him what time he got off work, Trey said 8:00 pm... I immediately FAXED the 30 pages AGAIN ... ( I had faxed it 4 other times ... on other days I had made calls )

and on the cover page I told Trey he was the only one that could postpone this Auction in the morning, I also told him on my cover sheet ... I forgot to get his direct line phone number & I had no idea how I got him the last time! So could he please call me back ... well my FAX went through, confirmation30 pages final at 5:52 (our time) 7:52 Treys' time ... I worked that evening until past 10:00 again! and went home... no call from Trey... When I woke up the next morning I called the phone number for the Auction and low and behold ... the sale was postponed... until May 15th... I have opened Escrow and we will be closing the 30th of April ... now the part you are not gonna believe! all of this on a defaulting mortgage of $35,000 the Fair market Value of the property is $38,000 + or - and we had a $37,000 CASH offer on the Table since last Feb 5th... pencil that one out ... ha! and I am just the listing Realtor I get to split this commission 50/50 with the selling company!

PattyLuther but that is ALRIGHT ... the original reason taking the listing on a short sale was to help out my sweet little old lady seller who got herself into a real bind on this property! btw the home is a tear down ... had been vacant for 4 years ... the buyer will be tearing the old home down and rebuilding on the lot... the bank is probably real HAPPY I was so persistent on this one ... I don't think they wanted it back... they had just did the rush BPO on it the week before this! Trey must of saw the picture! HA!

Patty. Good job. Good luck closing it. The bank will, no doubt, routinely put a few more barriers in your way to closing.

Maggie. One of our brokers closed one two weeks ago that was written in October. What a waste of time, money and energy, everyone's energy.

John. Some day I'll tell you the whole story. You must, however, know that I have a closing rate of about 95%.

James. Let it out. Let it all out.

Kent. I believe we're past that stage. We have the bank's approval letter with closing instructions.

Kerry. Surely you don't believe that is unusual?????

APR

Hurry up and wait seems to be the banks motto...I just sent an email to a CEO of a bank...lets see if I can pick up the pace..I too am having some trouble keeping buyers happy and in truth I understand. We seem to work at a different pace..and reality from the banks.

Midori. The simple fact is, banks don't know how to sell real estate.

Also, sadly, we are not privy to the banks' motivation in not moving faster to clear these sales for closing.

Patience is a virtue with Short Sales true indeed, however the question is who is processing the deal; with a background in lending I have found it somewhat easy to deal with the banks because my expectations are very low from the outset.

Dealing with these banks requires one to think on a level that is so foreign to the average sane agent that I think it is prohibitive for an agent to process the deal themselves; I recommend outsourcing the processing to a seasoned trained negotiator.

Also be very selective when it comes to working these types of deals.

APR

Tyron & Angela. Dealing with these banks is, indeed, foreign to most agents.

We like to get things done and have closed transactions and get our buyers in the home that want to buy.

What a concept.

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