Why Do Short Sales Take So Long?

Real Estate Broker/Owner

Snohomish County Homes for Sale"Why do short sales takes so long?"  I get asked that all the time"Doesn't the bank see that if they foreclose they will lose more money?" 

Well- will they? 

We have been in this depression now for a good four years. Snohomish County Homes for Sale I have heard the banks time and time again say that they are trying to "ramp-up" their short sale departments.  They are trying to expedite the time frames.  Then why does it still take 90 days, in most cases, just to get them to verify they have it and they are in process?  That does not seem expedited to me. 

I am not a scholar or an economic analyst (if you know me you certainly know that to be the truth!)but there are two things I know about banks:

Snohomish County Homes for Sale1) In EVERYTHING they do-they make money. 


2) They do not do anything...ANYTHING...that loses them money.

I mean, they're a bank!  If short sales were greatly more beneficial for the banks in the short or long term, you could bet they would have ramped up.  They are the most profitable industry in the world!  If short sales worked in their balance sheets we would see them calling homeowners to market short sales!  You would be inundated with junk mail and spams and people at the counter saying "Mr. So and So, I just wanted to let you know of our excellent expedited Short Sale program we offering..." 

Yet here is what is actually happening:  Foreclosures are on the rise.

Foreclosure Rates

I am actually a bit insulted by the whole thing as short sales and loan modifications seem like a lot of pandering to the public to me.  4% of loan modifications are actually granted- and that is usually to people who could otherwise qualify to refinance.  I have done numerous short sales, and I can't imagine that a 120 day, 270 day or 360 day closing cycle, when you think of bank employee costs, filing costs, etc, is lucrative.  The HAMP Program was supposed to help rectify this problem, but it did not actually accomplish much:

After two years, many of HAMP's goals have been largely unmet.

We saw this in the credit card industry with the "Credit Card Reform" legislation.  Snohomish County Homes for SaleIt was marketed in a way that made consumers feel that their rates would go down, they wouldn't be charged usury for being a day late, and their rates couldn't be randomly changed at the whim of the card company.  What it actually provided for was that certain terms that may appear on page 27 of your contract, such as "...subject to change at anytime by card issuer's discretion" is now on page 24.  Well- they did make sure it is in bold print.

OK.  That is an editorial comment, but here is an article that shows the effectiveness, or potential lack thereof, of this law:

The Color of Money

You have got to read question 2 in the Q&A.  Like I said, They do not do anything...ANYTHING...that loses them money.

I have figured there is some way that foreclosing on properties and keeping short sales long and arduous works in their favor.  Maybe even if it is keeping their quarterlies down so as not to have to pay so much back to the government- check this out:


Who knows?  But something is going on.  Whether it is an issue with market control, or long term loss mitigation, I do not buy that they are still just "understaffed".  I was doing some research in our area on Short Sales and distressed properties and what percentage of the market they are.  Here are some statistics based off of Trulia stats:

There are currently 2,623 resale and new homes in Seattle, WA  on Trulia, including 66 open houses, as well as 1,953 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

 There are currently 481 resale and new homes in Marysville, WA on Trulia, including 2 open houses, as well as 478 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. Kent, WA: 55.1% of homes for sale are distressed

There are currently 626 resale and new homes in Kent, WA on Trulia, including 769 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

What this means is that the conglomeration of banks- so, basically, the banking industry, will own or control the market time  of upwards of 50% of the market at any given time!

I am not a conspiracy theorist by any means.  I know that the moon landing was staged on a movie set in HollywoodSnohomish Homes for Sale.

I mean, if you look real hard, the flag is blowing in the wind... There is no wind on the moon!  And you can very faintly see the seam for the set background.

I am kidding, of course.

Let me know what you think.

Maybe we will get a banker to chime in?

"Listen Here, Mr. Potter...."

Snohomish County Homes for Sale

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Comments (6)

Rama Mehra
Asante Realty - San Ramon, CA

hey Brian, I am all for conspiracy theories but this one seems a bit far fetched !!! But food for thought for sure

Jan 28, 2011 06:03 PM
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

I get your point - they are benefitting in back-door ways, and sometimes a short sale is not going to net them the most. That being said, a couple weeks ago I was looking at short sale and foreclosure numbers on Trulia for my town, and they seemed off. So I actually did the counting myself, and Trulia was WAAAAAY off. Some of the homes that showed as foreclosures or short sales, were not listed that way in the MLS. So I contacted a few of the listing agents and nope, their properties were not short sales or foreclosures. 

Jan 28, 2011 06:23 PM
Jeanne Kozak
RE/MAX In Action - Martinsburg, WV
REALTOR and Broker/Owner in WV and VA

I agree, there is no good reason for short sales to take so long. There has to be some unknown. I think that the banks should have to disclose how much they get from the MI if they short sale vs foreclosure...wouldn't that be interesting?

Jan 28, 2011 06:24 PM
Rene Bayani
Crestridge Partners - Irvine, CA

I get where you are going with the blog....but I do have to disagree with your core belief's about Banks.  There are plenty of examples to counter both of those statements.  Some being at the root for the reason a short sale or foreclosure is necessary in the first place. 

Jan 28, 2011 06:41 PM
Art Hademan
Century 21 Real Estate Center - Mount Vernon, WA


Short sales can move at the same rate as conventional deals but the ducks have to be in a row.

Lots of Realtors don't know how to do short sales correctly, how to get all the paperwork to the lender and how to price the home for sale.

It isn't easy but it isn't that hard either.

I agree with you concerning the banks.

Who do you really think was responsible for 9/11?

Jan 28, 2011 07:30 PM
Paul Gapski
Berkshire Hathaway / Prudential Ca Realty - El Cajon, CA
619-504-8999,#1 Resource SD Relo

Well sometimes i dont know what to think of short sales. They are getting better and then they are not!

Aug 13, 2011 12:47 PM

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