Short sales have been in the news a lot lately, and by now we've all read and heard stories about many short sales failing. Here are some reasons why many short sales do not succeed:
Improper pricing. First and foremost, a short sale needs a willing buyer and an accepted offer. A short sale property needs to be priced to sell, without giving away the farm.
An incomplete or improperly submitted proposal package. Once an offer is accepted, the seller needs to submit a proposal package to the lender for its review. The proposal package includes multiple documents and dozens of pages. If the package is incomplete or improperly submitted, it can delay the approval process and cause the sale to run out of time before the sheriff's sale. An experienced Realtor is essential to avoid these mistakes.
Inadequate follow-up. Once the proposal package is submitted effective communication with the lender is critical. If the listing team is not proactively communicating with the lender and helping to move the short sale through the approval process, delays can occur, causing the seller to run out of time or the buyer to walk away from the transaction.
Failure to negotiate all liens. A successful short sale requires that all debts that are liens against the property are satisfied. This requires the agreement of each and every creditor/lien holder and usually requires at least partial payment of the debt. Failure to identify which liens to negotiate can derail a short sale at the 11th hour.
Thanks to Peter Zarov from Homestead Title for his contributions to this post.
In a future post we'll share how our real estate team is addressing the pitfalls listed above.
Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com
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