I have many clients who ask me what are my thoughts about short-sales. My answer is SIMPLE…”STAY AWAY FROM SHORT-SALES!” The experience of a short-sale can be a sobering and depressing one, especially for a first-time homebuyer.
In my attempt to explain to homebuyers why a short-sale is not the best choice for your first homebuying experience, I have created a list of reasons as follows:
1. Time-consuming: The short-sale process has not been streamlined so there is not set procedure for the whole process. Each bank has their own rules and timeframe for dealing with short-sales. A short-sale can take anywhere from 3 to 8 months for approval and actually getting keys at settlement.
2. No Guaranteed Outcome: The main problem with the short sale process is simply lack of COMMUNICATION. In most banks, there are two departments: 1)short-sale dept. 2)foreclosure dept. Neither of these offices communicate to each other regarding a particular property. Even though a property is approved for a short-sale, the foreclosure department is still proceeding with the foreclosure. There are many instances after 2-3 months into a short-sale, the seller and buyer will be surprised to find out the property has gone into foreclosure and will be sold on the court house steps.
3. Waste of Money: Most buyers thinking about purchasing short sale are looking to save money on a “GREAT DEAL.” However when factoring in the opportunity cost of your time being spent on a short-sale at best you breakeven. I have many clients invest in appraisals and home inspections just to find out the bank has decided not to approve the short-sale.
4. Cost you more money: A short-sale is not always a great deal because the bank will not always guarantee to pay the fees associated with the transaction. For example, if you are in a transaction and the bank decides not the pay the agent commission or attorney fees, then the seller and/or buyer would be responsible.