Why are short sales not closing?

By
Real Estate Broker/Owner with Action Investments and Hawaii Pacific Realty BRE Lic# 01481898

I came across a few good points to look out for to share today.  To start, it was stated that about one third of short sales are not able to be closed for varrious reasons like:

  1. Seller has too many assets--In this case the lender will require an owner contribution which could be the deal breaker.
  2. Seller won't cooperate in the process--This is important because the seller will have to be patient through the process and will for sure have to sign a lot of paperwork.
  3. House is the lowest 10% of the neighborhood--This becomes a problem because the comparable will show the house is worth more than a buyer is will to pay since with the seller not wanting to do any repairs.
  4. Outstanding Liens--This could be HOA leins, mechanics leins, IRS leins, family loans in which leins were filed...all of which need to be satisfied to close the short sale.

This is why I allways want to ask several questions up front before beginning the short sale process to determing if there will be any issues.  Sellers should know that if they have assets, they will be asked by the lender to contribute towards satisfying the junior or second lien holder, typically an amount of 10% or more.

Posted by

Jason Hector, Real Estate Broker, CA Dept of Real Estate Lic. #01481898
(818) 357-9658 Cell
(866) 791-3290 Fax
jhector@socal.rr.com
www.jasonhector.com
Broker--Action Investments
11630 Seminole Circle
Northridge, CA 91326
(800)-626-6469 Phone
(866)-791-3290 Fax

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Rainer
112,137
Cari Anderson
Danville, CA

Jason - Thanks for providing a comprehensive list.  The outstanding liens segment is very informative.  As time goes on this category can get more muddied.  Thanks again. ~Doug

Feb 04, 2010 12:10 PM #1
Rainmaker
147,140
Kathy Akers
Fathom Realty NC LLC - Rocky Mount, NC
Your Trusted Real Estate Advisor

Jason, great info.  I am working on my first short sale listing and will keep this in mind.  Thanks, Kathy

Feb 04, 2010 12:35 PM #2
Rainmaker
455,865
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Jason - Great points for those interested in purchasing or trying to "short sale" their home.  That's why both buyers and sellers need the advice of a qualified professional.

Feb 04, 2010 12:53 PM #3
Rainmaker
610,186
Tracy Lee Parker
RE/MAX Dallas Suburbs/PLATINUM PROPERTIES & MANAGEMENT - Royse City, TX
Buy*Sell*Lease

Jason,

Excellant list! You might want to add if the seller moves out, must leave the utilities on until inspection is over.  I ran into this problem last fall, the seller moved out and disconnected everything!

Feb 05, 2010 09:42 AM #4
Rainmaker
180,472
Kevin Vitali
EXIT Realty- Massachusetts Short Sales & Residential Sales - Tewksbury, MA
Helping Massachusetts Home Buyers and Home Sellers

Good advice... its important to do an upfront interview in your first short sale consultation.  Also weed out the people who might consider a loan mod or bankruptcy.  Thers nothing worse than being in negotiaions and find out they filed bakruptcy or they are trying to do a loan mod.

Feb 05, 2010 10:27 AM #5
Ambassador
566,489
Rosemary Brooks
BMC Real Estate - 209-910-3706 - Stockton, CA
The Mother & Daughter Realty Team

Those liens are definitely a deal killer, especially when the seller does not have any money or means to get it removed.  Deal will die.

Feb 07, 2010 02:42 PM #6
Rainer
13,683
Young-Jin Yang
Keller Williams Realty - Lake Balboa, CA

Awesome list Jason. Very helpful information. More agents should be aware of this (some are not unfortunately). Thank you for spreading the knowledge to the masses!

Aug 14, 2010 09:01 PM #7
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Rainer
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Jason Ian Hector

Real Estate Broker in California and Hawaii
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