5 Common Reasons for Short Sale Failure

The first thought that strikes our mind on hearing “Short Sale” is whether it will close successfully or not! It is quite often that we hear about a short sale that didn’t close successfully and rightly so. But being a short sale agent in Temecula, I would like to tell you that nearly 2 out of every 3 short sale deals close successfully. The chances of a successful deal are proportionate to the experience of your short sale agent. Well, I never mean that novice agents are unable to close a short sale but an experienced agent has plenty of experience to handle such properties comfortably. 

Short sales are complicated and require much more time than the regular property dealings. There are chances that an inexperienced agent may not have come across such issues before as in case of a short sale. This article is focused towards short sale agents who are afraid that the deal will close. Some of the potential issues that may across in a short sale are discussed in this post.

•Seller contributions required by the Bank: Most of the banks will ask for seller contribution in every situation and even if the seller has no assets and funds. In case the seller has nothing to offer, the bank would prefer to sign a promissory note with zero interest.

•Home is vacant: According to the servicing guidelines, it is required that the home should be occupied. Under extreme conditions where seller has moved out and is unable to shift back, the short sales often result into failure. Any property will seller living in it will have a better chance of closing up successfully.

•Loan modification offered by the Bank: As an expert short sale agent in Temecula, I have witnessed short sale deals where the sellers have received great loan modification deals once they decide to go for a short sale. Loan modification requests that are denied initially by bank can possibly turn into incredible repayment plan once the seller decides to list the house under a short sale.

•Pending Tax liens and UCC filings: Most of the buyers do not order a title check of the property until the house is approved for short sale. There are some tax liens that are required to be paid even if the seller has opted for foreclosure and the payment has to be made before the deal is closed. Failure of payment may lead to failure of short sale.

•Unapproved fees for payment: Every short sale deal includes some fees and additional cost like repair charges etc. In some cases, buyer may need some credit at the time of closing of the deal and if the bank has refused to pay them, the deal will not be closed successfully.

Additional Reasons: Some deals may not be closed because of a troubling second lender, inexperience realtor  and even because of the attorney that handled your case lightly!

There are dozens of more reason that may lead to failure of a short sale deal. If you are buyer, it is advised to hire an experienced short sale agent in Temecula along with an attorney specializing in short sale. It's always worth to have experienced people in your team. Stay tuned for informational posts in future!