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What are the Odds of Successfully Buying a Short Sale?

By
Real Estate Broker/Owner with Complete Florida Realty

            Ever since the real estate bust, I have been asked this question on a weekly basis. Now that the market has picked up I’m asked this almost daily! This is an update from when I answered this question back in 2009 when roughly only 25-30% of short sales were getting approved.

 

            The short story; short sale close rates have improved!1/2

- For the entire Central Florida Market, 50% of short sales close.

- The average days it takes to close a short sale is 256 (8 ½ months)

 

            My personal experience is a bit better however. Out of 50 total recent short sales I’ve represented buyers with, only 16 of them have fallen through, or about 68% are successful vs. 32% fail rate.

 

Why is there such a high failure rate with short sales? Well at the end of the day it comes down to the agent or attorney a seller hires to negotiate the short sale with the lender. There is most definitely a difference in the effort, experience and tenacity needed to see a short sale through to the end. I can’t comment too much on the overall market, but I’ll share what happened with the 16 failed short sales my clients and I have been involved with.

 

#1 reason for failure– TEN of the short sales fell through because the overall cost to purchase the home (purchase price, additional payoff of secondary liens, or repairs the home ended up needing) was higher than what we thought the home was worth given condition. Remember the listing price of a short sale is very rarely pre-approved by the seller’s bank and may not be as much as a bank will want to approve the sale.

 

#2 reason – Three fell through due to sellers unresolved legal issues. At the end of the day, the seller realized or was advised that a short sale was not their best option.

 

#3 reason– Two fell through because we came too late into the process and a foreclosure took place before the seller could get our offer approved.

 

#4 reason– Only 1 fell through because the short sale simply took too long and we moved on to another property. (After 6 months of waiting, we cancelled, and the home eventually did sell another 7 months after that)

 

            Anecdotally, other agents that don’t have a majority of investor clients as I do, seem to have much higher failure rates due to approvals taking too long and their buyers moving on to another home. And their #2 issue being overall costs ending up being higher than their buyers are willing or able to pay.

Your Orlando Home Expert

Direct: 407-222-7281

GregMTraub@gmail.com

 

 

Comments(1)

Tamara Schuster
Naperville Glen Ellyn Lisle Plainfield Wheaton Illinois - Naperville, IL
Realtor Broker - Naperville

NIce blog to share.  All buyers must e educated that the price may be different than listed and to know what the comp which is low market value ( not foreclosure price) could likely be prior to puttingout an offer and that the listing price is often off by thousands.


This is great you are educating.

Jan 18, 2013 05:38 AM