After trying to make offers for my clients on short sales, I have "lovingly" termed them "virtual sales."
Like a lot of areas, San Diego has its share of short sales (home sales where the owner owes more to the lender than what the home can sell for). Although the borrower/seller still owns the home, the bank has to approve the contract because they have to agree to take less than what is owed to it. So many buyers enjoy the idea of the short sale because the price usually looks attractive, but so few actually end up selling.
Three motivated buyers, three different offers, all the same result:
Buyer 1: We made an offer for the home back in October. We still have not heard an answer (even to this day), so my clients bought a different (non-short sale) home.
Buyer 2: We made a full price offer on a home in December. We never heard anything, except that an answer was "coming soon." My client got so tired of hearing that, that he recently bought a different home and has now closed escrow. The area that the short sale home is located in has gone down in price so I doubt that it can be sold for what my client offered.
Buyer 3: We made a full price offer on a home, also in December. Finally, after 5 weeks, the bank came back and wanted $30,000 more. My clients have moved on.
Although I know that a portion of short sales actually sell, it's amazing to me how difficult it is to actually get a bank's cooperation. I understand that the banks have other priorities and that they need a lot of information before they will approve a sort sale, but if there is a willing, able and motivated buyer, it seems to be in everyone's best interest to actually sell the home rather than let it go into foreclosure, costing the bank more money.
I can only imagine how frustrating it must be for the listing agents too. I have seen listing agents bend over backwards to get a short sale to be approved only to face the same frustration.
Until banks become more motivated to work to on short sales, I counsel my clients about the pitfalls and risks of those "virtual sales," and let my clients decide whether they want to wait it out. I have to explain that the list price isn't necessarily the price the bank will approve. More often than not, my best buyers decide that waiting for a bank just isn't worth it and will move on to other properties.
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