Review Journal article written by Hubble Smith
I would like to comment on the article on Shorts Sales in Las Vegas, Nevada is no longer a Niche Market. It is interesting that there has been a increase in the number of closings of short sales, 16% in October from the first quarter of only 8% short sale closings. The pending contracts that are in escrow for short sale approval is a very slow process and is fraught with perils for the buyer and the seller. The peril for the buyer is the time it takes to get approval or denial is 3 to 6 months, or the bank just forecloses on the property instead. The latter has happened to one of my clients when the first was sold to another lender and the new lender foreclosed on the property without looking at the offer.
For the seller that is trying to do the right thing by going through the short sale process, instead of foreclosure or bankruptcy are now seeing the banks giving approval to the short sale only if the owners agree to sign a document giving the bank the right to collect the difference from them for up to six years. Talk about a gun being put to your head!
Is the increase in closed short sales a result from a backlog of contingency contracts in escrow that are now moving through the process or is it actually a subtle change in banking policy and accepting more short sales? I believe it is not the bank changing policy but it is like a funnel filled with rice a few grains of rice will fall through the opening slowly at first until a path is made.
The reasoning is based on statistics from Nevada Title showing in October, 428 short sales closing and 1,261 short sales failed a 1 to 3 success ratio. Most studies that I have seen, shows the banks can recover more from a short sale if they do not have to start the foreclosure process which is costly and time consuming.
I believe that short sales would help stabilize the housing values in Las Vegas, Nevada as foreclosed properties take time to go back on the market. Vacant houses are not maintained and are left to deteriorate which only drops the values further.
With more willing and able buyers then available homes, there must be a solution that works for all parties and in a more timely manner.
Without a process for approving a short sales, and shortening the time to get that approval, short sales will continue to be a Niche Market.
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