I know many people have had great luck with short sales. And I know I haven't really given it a fair chance, but I hate short sales. This is why; I've had 3 different buyers try to purchase a short sale home and all 3 transactions have given me trouble. Here is what happened. On the first short sale the process took so long my client got impatient. But he stuck with it. We went into escrow (big mistake) did a home inspection, and found some major plumbing problems. Since this was an "as is" property, my client felt it was too much to pay for in addition to other repairs that were needed. So he backed out, and we initiated the cancellation. The agent either refused to have the seller sign to return funds, or maybe the seller refused. We almost went to small claims court a month later when they finally released the earnest money. For the second short sale, I had learned my lesson and held my client's money until the bank approval of the sale. In this case it took so long for the lender to respond that my client lost interest, and, once again, backed out. At least I was still holding his check so that was much easier. The third time everything was going very well. The lender holding the first lien responded very quickly, then we waited for the second lien holder. They took their sweet time and, in the end, refused to accept the deal sayingeven though they were getting a small sum, they weren't getting enough. Now the way I understand it, if the property goes to foreclosure the lender in second position loses everything. It didn't make sense that they would want to lose everything, but here we are. We are in fact still working on this deal two weeks later, and maybe we will come up with an answer. The cog in the wheel is the second lien holder.
If nothing else I've learned some important tips.
1. Advise your clients this could take as much as 6 to 9 weeks for the lender to approve.
2. If there are two different lenders involved the lender in 2nd position could stop the entire process. Try to work with just one lender on a short sale.
3. Go the the 2nd lien holder first. If they don't accept, it doesn't matter what the first says.
4. Hold the buyer's check in the file or your broker's file until acceptance. That way the buyer is assured of getting their money back in case of a cancellation.
Comments(7)