A buyer asked me a common sense question: “Why are so many short sale houses vacant? Why doesn’t the bank encourage the seller to stay so the house will stay maintained and protected?”
He had just walked through a Louisville vacant house that the bank had neglected to winterize. He claimed the water pipes had burst and there were icicles inside the house.
The banks usually don’t expect the sellers to make payments while they continue to occupy the house during the short sale. Sellers can stay in the house during their time of dire financial need.
Sellers do not have to leave the house until closing, so why are so many short sale houses vacant?
1. Sellers are spooked. When they get served foreclosure papers they don’t know the length of the process and they flee the house in fear. In my county of Jefferson County, Kentucky, there are usually 5 to 12 months from being served until auction.
2. Sellers don’t believe or trust their lender. Too many broken promises from the bank. One department files foreclosure while other departments drag their feet on a loan modification or a short sale. We had a client get served with the foreclosure lawsuit even though the closing was set for the following day.
3. The short sale process is so illogical and lengthy that the sellers can’t handle the stress and they leave. Coupled with the seller’s distrust of the banks, they have visions of coming home from work to find their kids crying on the porch locked out of the house with their stuff thrown on the sidewalk by the sheriff.
4. Job relocation. The sellers can’t put their life on hold while the banks delay the short sale. The sellers and Realtors try to help the banks reduce their losses but the banks blow them off. Sellers and Realtors can only help the banks if the banks are willing to be helped.
5. Divorce. Too many bad memories and/or court orders, and they’re gone.
6. Sellers want to move on and situate their kids in a new home, new environment, and a new school district and cannot wait for the banks for an unpredictable number of months to approve a short sale.
7. Sellers don’t want to live in the home that reflects broken financial dreams.
Banks Can Avoid Unnecessary Losses
If the banks would improve their short sale processing they could save themselves from massive losses resulting from hundreds of thousands of extended vacancies of short sale houses nationwide.
Proper Guidance From A Short Sale Realtor Is Needed
Many of these sellers could have stayed longer in the house if they had expert guidance from their short sale Realtor. The proper guidance could reduce the seller’s stress level and improve their finances.