For buyers, purchasing a home that is involved with a short sale can be a really great opportunity however be prepared to wait and wait and wait and oh, wait some more.
For those home owners who simply can’t afford their monthly mortgage payments anymore and are facing foreclosure, are now turning to their banks and asking if their home can be approved for a short sale. In case you are not aware of what a short sale is, a short sale takes place when a home owner owes more on their home than what the home will eventually sell for and will not have enough to pay off their current mortgage. The bank can approve the sale of the home and essentially forgive any remaining monies due on the mortgage or in many instances mortgages therefore avoiding foreclosure.
But, what’s with the name “short sale?” It’s been my experience that a short sale isn’t short at all, in fact, it’s a very long, drawn out tedious process that can take months to close leaving many impatient buyers wondering if they will ever take possession of their new home.
So, why does it take so long? Well for one reason, many Realtors simply do not know what they are doing. Many Realtors think that once they send the offer over to the bank, that’s the end of their responsibility and all that is left to do is wait for an answer. An answer that probably will never come. Once the offer is sent to what is called the loss mitigation department, it has to go through various departments for approvals. The bank needs to have an their own appraisal performed, they need to review all of the paperwork they requested from the buyer which includes what is called a hardship letter that explains why it is the home owner couldn’t afford to pay their mortgage anymore as well as bank statements, comps, photos, tax returns and anything else they can think to ask for. They also need to see an estimated closing cost sheet which details just how much money the bank will be getting from the sale of the home. Each process can take weeks. The truth is that lenders usually just drag their heels in getting an answer back to the Realtor.
I think the name “short sale” confuses many buyers. Seriously. I’ve told many buyers exactly what the process involves and yet the buyer will still call every week to see if their offer was accepted. It’s not just buyers it’s Realtors to. I’ve had buyer agents call me every day to ask what is going on with their client’s offer.
What I can say about a short sale is that yes, it can be a great opportunity for a buyer to get a very nice home for a great price but if you need to be in your new home quickly, a short sale is not for you. If you do not have patients, a short sale is definitely not for you. If you have a home to sell and do not have a place to stay if your home sells while you wait for an answer from the bank, a short sale is not for you.
There is nothing short about a short sale. The name is a bit deceiving though I am sure the name has absolutely nothing to do with how long the process actually takes, it still doesn’t make explaining it any easier.
If you are a buyer who is involved with a short sale, be patient , make sure your Realtor is experienced with short sales before you ever view the property and understand that the seller has no say over what your offer is anymore. It’s all in the bank’s hands.
And that’s the long and not so short of it.