Are you sure you have the patience for a short sale?
Posted by Hamid Grinage on Tuesday, September 15th, 2009 at 4:31pm.While I do work on Short Sales, it's very important that the client has expectations that are in line with reality. When explaining the differences between normal, REO, and short sales to clients I try to always stress the fact that patience is the biggest factor. I currently have a client who has been waiting for lender approval of his offer on a short sale listing, and we are on MONTH number 6! That's right, it's been six months since submitting the offer and we haven't heard anything from the lenders yet. I have a colleague in my office who is literally ONE YEAR into a short sale, and STILL waiting on approval. If you were looking to buy a house, would you want to wait that long to know whether or not your offer is accepted? I think not. At the same time, there are those who are in a position to wait that long, and they don't mind waiting. These buyers are the best candidates for short sales in my opinion.
One of the biggest factors in determining how long you may expect to wait for an approval is the number of loans on the property. If the current owner of the home has a first and second mortgage with different lenders, then you are seeking the approval of not one but TWO parties which of course complicates things. Once an approval is issued, the bank still has the right to accept another offer or deny the sale period. Some lenders rewuire that the seller sign a promissary note which obligates them to pay the amount that is short (the difference between what the seller owes and what the house is selling for). And perhaps the worst part is that after all the waiting, the lender could very well decide not to approve the sale and foreclose on the property! Keep in mind, when an offer is submitted on a short sale, the seller is asking his/her lender to approve the sale and accept the loss. This means that even though buyer and seller are in agreement, the buyer's loan is ready and everyone is ready to go...the lender can still prevent the sale from happening.
The cold reality of short sales is that they are a huge percentage of the marker right now, so it's important that I know how to execute them. However at the same time prospective buyers who want to look at short sales need to know just how much different they are, and how much time can be wasted when pursuing one.
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