Top Reasons Why Short Sales May Take A Lot Of Time

Real Estate Agent with Dockside Realty Company 48011

Top Reasons Why Short Sales May Take A Lot Of Time

Short Sales ConwayIn contrast to its name, short sales can actually take a lot of time to complete. This is especially true if you are planning on doing it on your own and without any professional assistance. Although homebuyers are aware of this, many are still considering buying real estate through this process. This is primarily because of the savings one can result from buying through this real estate process.

short sale transaction is when a house is sold for less than the amount of mortgage debt that is owed by the homeowner. In this type of real estate transaction, the buyer negotiates not only with the seller or owner of the house but also with the lenders and banks that financed the mortgage on the house. A house can have one or more mortgages on it and the buyer needs to seek approval from all lenders and financial institutions that have money in the house.

This particular type of real estate process will generally take time due to the numerous repetitive negotiations the buyer has to go through with the owner of the house as well as with the lenders and financial institutions with which the mortgage on the house is owed. On the other hand, there are other factors that could make the process even more extensive.

Bank and lender procedures

As you decide to pursue a short sale transaction, you will have to seek approval from the banks and lenders that financed the mortgage on the house. After submitting your proposal to them, they then go through several processes before making a decision. They want to make sure that selling the house through a short sale is best option for them.

Keep in mind that when a homeowner starts to get behind with his mortgage, the banks and lending institutions start to lose money that they have invested in the house. There are several options for them to consider, but they will choose the option where they will lose the least amount of money. Some of the options they are considering are foreclosure, putting the house in auction and other short sale proposals. Keep in mind that the bank has thousands of dollars at stake in this type transaction; thus, they would want to take their time considering all their options before making a decision.

Aside from these, the banks and lending institutions will also want to take time to assess and confirm whether or not the owner of the house can no longer continue to pay for the mortgage. They will spend time evaluating the owner’s finances to confirm his inability to pay for the mortgage as well as to the difference between the loan amount and the amount the house is being sold at.

Lost paperwork

In this type of real estate transaction, there is a lot of paperwork involved. You will need to prepare and sign a lot of documents and disclosures. And they sometimes get lost when submitting them, especially if you are faxing them in. It is extremely important that you make sure that all the pages where a signature is needed is signed and that all the pages will be received by the bank or the lending institution.

What makes this even more difficult and trickier is that most of these banks do not assign a lot of their staff to processing short sale requests and transactions. Most of the banks would rather place their resources with clients who bring in money and allow them to profit. And because of this, part of the paperwork often gets lost, sometimes, without the buyer knowing. And when a document is not complete or when it is missing a page or two, the banks will put the entire purchase process on hold and wait until they receive the complete copy of the signed documents.

Having two or more banks and lenders

If the house being sold has two or more loans, it may mean more time to allow the banks and lenders to approve the purchase request. And most often, they go through different evaluation and assessment processes; thus, they do not always reply to the request at the same time. Sometimes, they do not coordinate with each other, prompting the buyer to go back and forth between all the banks and the lenders to follow up with the request.

Buyers should also note that most banks have an expiration date for their approval of the purchase request. Generally, this is 30 days after they sent their approval. On the other hand, it may not be the same for all banks and lending institutions.

To ensure your short sales transaction will not take longer than necessary, you should work with a trained and skilled real estate professional. Call Jill Klunk to speak with one of their real estate agents now.

Jill Klunk
Conway,SC 29526
Dockside Realty Company
phone: 843-267-5891

John Pusa
Glendale, CA

Jill - These are very good list of reasons why short sales takes long time.

Jul 10, 2015 11:09 AM
Jill Klunk

Thank you. Most people don't understand and it is up to us to keep them informed on the process.

Nov 17, 2015 09:04 AM
Michael Dagner
Brokers Guild Classic - Denver, CO
Your Denver Homes Realty Expert

Hi Jill, yes, good information.  We might be seeing more of these short sales in the near future, as many areas have reached their market highs.  

Jul 10, 2015 01:25 PM
Jill Klunk

Thank you. Unfortunately, I think the same. I just hope it is not as bad.

Nov 17, 2015 09:05 AM