Why Short Sales Dont’ Close
July 24th, 2008 Categories: Uncategorized
Ahh… the infamous short sale. Most every home buyer has heard some horror stories about a short sale falling apart. Why? Do they know why? Sometimes you never find out.. here are some past reasons that I have experienced.
First, all short sales are not created equally. No file is the same, banks have different guidelines, the end-investor has their own internal guidelines, and the agent has their own system for processing. Every file is different. It is up to the agent to foreshadow and roadblock ahead of time to save everyone time and energy. Here are a couple reasons: 1. The agent listing the property does not know how to execute a short sale. This was common a year ago, but most agents have gotten much better.
2. The bank just doesn’t do short sales. Rare, but their are some banks that don’t. It is up to the agent to find out. Also, most banks do not have the resources to handle the volume. So a file can easily slip in the cracks if not followed up on correctly.
3. The seller’s package is non-desirable to the lender or investor who controls the mortgage note. This is very common with investors or seller’s who have used their home as a ATM. And most of the time it is the second lien holder. Again, the agent listing the property has to pre-qualify for this upfront.
4. The seller waited too long in pre-foreclosure and the home has been foreclosed on. You can get an extension on the auction date but not all the time. It is best to start as soon as you know you are in trouble.
5. Here is a a reason that is common right now. It has to do with the seller. An agreement letter(s) will be issued but it will place a unsecured note of debt on the seller for the deficient amount. Meaning, the bank will honor the short sale but only if the seller signs their life away to a note that they have nothing to show for. Most seller’s will not sign and rather foreclose… This is very common right now.
Right or Wrong it is happening…. Who’s right? Who’s Wrong? doesn’t matter. Jus sayin
A short sale is never a guarantee but a lot do go through if the buyer has some time and everybody works as a team.
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