Over the past six months the media has been reporting the "great opportunity" homes buyers have in purchasing a property in "short sale" status. The message was repeated again and again. What was missing from that drumbeat was any mention of the reality of the process, which is a far cry from the rosy picture earlier reports painted. Now just two weeks ago, The Washington Post printed a hard hitting article that laid out the ugly truth: actually closing/settling a short sale is tough and usually doesn't happen.
I've had personal experience with this. Clients put in a contract at the end of March and didn't settle until just last week -- almost 90 days from the day they submitted the offer, compared to the 30 days is takes to settle most traditional sales. Short sales are not for the faint of heart nor for the impatient, i.e., not for those who don't have the patience of a saint. Most short sales fail because the buyer walks away, not wanting to wait any longer on the lender(s) to make a decision on whether they're going to approve the short sale.
The details of the process are too long for this simple blog. In summary: (1) when a property is listed as a short sale, there's no guarantee the lender has given --or can give -- their approval for such upfront; (2) if there are two lenders involved, add time for each lender to give their approval and for them to agree on how much the second lender will get out of the proceeds -- and statistics show when two lenders are involved, a short sale usually fails; (3) the short sale arm of the deal doesn't talk to the foreclosure arm of the process, so the home could be foreclosed out from under you right up until you sign the purchasing documents at settlement; (4) you will most likely have to buy the property in "strictly as-is" condition; and (5) the buyer's agent cannot speak to the seller's lender, so all the information has to come through the listing agent. If you as a buyer can't put up with all of the above -- and more -- I urge you to consider bypassing short sales.
Having said all this, my clients put up with the ordeal and closed the deal last week. A large part of the success was the time invested and hard work of the listing agent, the sellers, the buyers, and me as the buyer's agent. Pulling together and with big doses of patience, we pulled it off and my clients closed the purchase.
Whatever your real estate needs, I'd be glad to help! Please let me know how I could serve you as either your buyer's agent or listing agent.
Sincerely,
John
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