Top Reasons to Avoid Short Sales

By
Real Estate Agent with REALTY PROS

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.

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Rainer
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Mary Macy
Top Agents Atlanta Metro - Roswell, GA
Top Agents Atlanta Metro

Hard to avoid something that has taken over 40% of the market and buyers want to save money.  The banks are making it easier and it is hard to resist the savings for the buyer.

Jun 04, 2011 03:27 PM #1
Rainmaker
3,135,944
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Jason - Excellent information and tips on reasons to avoid short sales. Thank you for the detailed quality blog.

Jun 04, 2011 05:07 PM #2
Rainer
21,497
Jason Trotman
REALTY PROS - Washington, DC

Hey Mary, fortunately short sales are not as prevalent here in Washington DC, but it is a large segment of the market in surrounding counties of Virginia and Maryland.  I personally don't think it's worth my time.  I'm glad to know they are making the process easier.  I might revisit short sales later on if it becomes 60% of the market. Thanks for sharing your thoughts Mary! Best of luck and thanks for your feedback!

Hey John, thanks for your feedback.

Jun 07, 2011 07:33 AM #3
Ambassador
2,756,610
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Jason.  Think about taking the SFR certificate course.

The problems you cite about selling short sales can be avoided 90% of the time.  We sell a lot of them in order to give our buyers the widest choices available. 

Clearly someone who needs a quick settlement doesn't fit.

Aug 17, 2011 09:45 AM #4
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Jason Trotman

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