Not All Short Sales Have Happy Endings
Short Sales are something most real estate markets haven't been seeing much of the last two to three years. Unfortunately, the suburbs of Northern Virginia have been a place where Short Sales, while fewer in number than during our market crash, still exist.
Just this year, 2016, I have listed five Short Sales. Three of them went successfully to closing. One was so easy I thought I was dreaming. The other two were what I have become to know as typical for the Short Sale process. Banks needing more documentation. Requesting the same thing you just sent them over and over. They see it, validate it and call next week to ask for that very document again. It can be maddening. But that is why I keep copious notes. Being able to document who you spoke to, what they said and when is the way you get a Short Sale file escalated.
The two that didn't get approved this year were real head scratchers. The first one the bank declared that the out of state sellers made too much money. They expected the sellers to pony up the short fall of the mortgage payoff. Well, they live in another home out of state, and decided that wasn't their desire. That home, sadly, is now in limbo. It is still owned by the same folks who tried to sell, and it is vacant. No doubt it is aging quickly and will be worth even less by the time the Short Sale Bank reclaims it through foreclosure.
Today's Short Sale denial, right in time to ruin the holiday spirit of all the parties involved, has so many reasons for denial that I can come to only one conclusion: the investor on the loan is out of their mind. The interest only loan has adjusted and is unaffordable to the sellers, who have moved on to another home. Through the years, these sellers have tried every refinance option they could. Because the value of the home had only recovered about 60% of it's value from the original sales price, no refinance was approved. And today, the last best shot of getting the most for the home was rejected by the bank. Merry Christmas, right?
While this is a set back for the buyer, and disappointing for my sellers, they will move on with their lives. My sellers will meet with an attorney to find out how they can best protect themselves when the home inevitably goes to foreclosure, even though they currently have no assets. In the meantime, the bank is hurting themselves the most. That home will also sit empty, aging quickly and depreciating further in value.
Short Sales are still the best option to try first when you have a financial hardship and can no longer afford your home and it isn't worth what you owe. However, when you attempt one, it isn't a guarantee that your Short Sale will be approved. I've helped so many Northern Virginia home owners successfully navigate Short Sales, but in the end, if the bank is unwilling or has rigid criteria that we just can't meet, that's when it is time to look at the other options. Starting with an experienced agent is the best shot you have at approval, and while I can't get them all through, my successes far outweight my rejections.
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