When I meet with buyers for the first time for our consultation, the question about short sales is one that almost ALWAYS comes up. What exactly IS a short sale? Does the bank own the home? Why does the wait take so long and what exactly are you waiting for?
To be perfectly honest, I try to avoid short sales AS MUCH as possible because to put it mildly I wouldn't wish the frustrating, long, and drawn out process on anyone. Unfortunately, it's sometimes the short sale property (shown as a last resort) that the buyer falls in love with. So what is a short sale, and why are they so darn frustrating?
To put it in the simplest terms possible, a short sale is a property that is still owned by the persons(s) that purchased it, with the contract between (YOU) the buyer and that current owner. The sale of the property is just contingent upon the Bank (lien holder) approving the contract between the buyer and seller. The property is NOT owned by the bank (not yet... it's slowly on its way), if it was it would be a foreclosure or REO. Those can usually close quickly.
The most general reasons I can offer as to why short sales take so long for lien holder approval are because:
• Banks are inundated with short sale files and;
• Their systems for handling them are unstructured, unorganized, and poorly managed. Important paperwork and information is constantly misplaced.
This does not mean however that they cannot be closed successfully, and sometimes within a reasonable time frame. Just make sure your buyer's agent knows what questions to ask the listing agent when considering submitting an offer on a short sale. A few examples for him/her to ask are:
• Who is the lien holder, and how many are there?
• Will the seller be accepting and signing the contract, and will only one contract be submitted to the lien holder?
• Will the listing be put as Contingent in the local multiple listing services (if applicable)?
If a short sale happens to be the one you fall in love with, don't think you can't eventually close on the house successfully. It may just take some time (like 4-6 months or longer) and diligence. Make sure you know exactly how long you are committed to that contract, and keep your expectations within reason. There have been new laws passed recently that are supposed to help speed the process along, so keep an ear out as I'm sure we'll be hearing more about them in the coming months ahead. Hopefully the new laws will benefit both buyers and sellers and the agents involved...unfortunately, only TIME will tell...
Jessica Touchton-Buyer's Agent with The Landry Team Keller Williams First Coast Realty (904) 534-8416
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