Normally, I would not be so negative about short sales, but I have experienced many problems in the last
30 days with short sales that we do not encounter with bank forclosures.
Situation #1. Buyer,seller and lender all agree to short sale. The file is opened up, appraisal and inspections are ordered, the loan file is processed, underwritten and approved. Then the docs are being drawn and the file does not close. Why?
The bank who agreed to short sale decided to foreclose on the property and does not inform anyone including the sellers and buyer. For all parties involved, valuable time, money and energy was wasted.
Short sales are not guaranteed!
Siuation #2. The buyer, seller and lender on 1st and 2nd all agree to the short sale. Lender #1 agrees to coe of 10/8/2009 and lender #2 agrees to coe of 10/8/2009. The file is opened up, appraisal and inspections are ordered, loan file is processed and ready for underwriting. Lender (myself) gets a call yesterday that lender #2 is going to now sell their 2nd to another lender on 10/1/2009. If the loan does not close by 9/30/2009 then the new lender approval for lender#2 will need to come from the new owner. The new lender usually takes 4 weeks to approve a short sale and now lender #1 will not extend coe further. Now if I cannot get the loan done in 19 days, my buyer will lose this house and seller will be foreclosed upon. Talk about a pressure cooker.
Moral of the (true) story: Short sales are not guaranteed!
Both situations are real war stories from real people put in bad situations. It is making me re-think a buyer's decision to buy a short sale.
What is your feedback?
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Short sales can often be a long, frustrating process than can result in many hours of work, energy, and planning and the buyer's time and money can all be lost!! I have sold several short sales and all had snags...but we got them to close, however I have heard more often that it's getting harder to get to the finish line with them!