Short Sales Do Fail – Things To Prepare For
We covered some of the objections that buyers’ agents and buyers have but we thought that we would cover the remaining short sale issues and how to overcome them.
Here Is A Summary Of The Ways In Which A Short Sale Purchase Can Be Derailed And How To Educate Yourself
1- Short sale sellers and agents sometimes list homes at a “ridiculously low price” just to get the ball rolling, the NAEBA warns. Similarly, a seller may agree to any offer, no matter how low and no matter whether it has a snowball’s chance of being accepted by the bank, just so he or she can begin negotiations with the lender.
Unless a foreclosure sale date exists that week and an agent and seller need to stop the trustees sale with any offer then the above logic just doesn’t carry that much weight. Often listing agents will list a home purposely low to draw multiple offers. Most buyers’ agents and buyers who have done their homework will realize that they need to submit an offer over asking. On the other side, an educated listing agent knows in advance if an offer will “fly” with the lender so they don’t waste everyone’s time with lowball offers.
2- A short sale represents only one remedy lenders can pursue, and lenders can use other methods simultaneously. For example, a foreclosure can take place at any time and kill the transaction, even after the lender has approved it.
With the new California Homeowners Bill of Rights (starting in January 2013) lenders will now be allowed to do “dual tracking” which means that they cannot go through the loan modification or short sale process while foreclosing at the same time.
3- Short sales can be long, drawn-out affairs. The timelines are shorter than they used to be, but it can still take months, especially if the seller doesn’t have his paperwork in order. And at any time during the process, the lender can change the rules, forcing everyone to start over again.
Yes, short sales still do take a long time but a buyer’s agent should be up front with the buyer about the timeline and process. The buyer and buyer’s agent should know the listing agents method for getting the short sale approved. If a seller and listing agent don’t have their act together (disclosures, reports, etc) then it may not be the best situation to get into.