1. Everything has to be approved by the bank: While the seller may accept the terms of the buyers offer, that is the first and easiest hurdle, assuming the homeowner is responsive, which is not always the case. So, if you are a buyer, regardless of what the seller agrees to, that means nothing until the bank approves the deal. So the offer needs to be realistic and agreeable to the bank.
2. The process is long and tiresome: the negotiation phase in most home purchases takes 3 days to 2 weeks. A short-sale takes a minimum of 2 months and up to 6 months in some cases! For many buyers, they enter the deal hoping it will be 2-3 months, but inevitably, many buyers get tired of waiting with little to no apparent progress. Many will move on and buy another property unless the short-sale really is their dream home at a great price.
3. Many banks have poor processes/systems: I cant tell you how many times a bank has lost a BPO (Broker Price Opinion) or other paperwork, which sometimes doubles the time it takes to get an approval. Many banks are simply not prepared to handle the number of short-sales coming their way. These are new scenarios with new legislation and new systems within the banks, so it is understandable that they have not worked out a smooth process for handling the short-sale.
4. The bank may not approve your offer: at least of all short-sales submitted do not get approved and the home is foreclosed on. This can be for a myriad of reasons. The bank may think that the home is worth more than the offer price. Maybe the short-sale negotiator or realtor handling the short-sale is horribly unorganized and unable to work with the bank, who may be just as unorganized. Whatever the case may be in each instance, there is the uncertainty that you could be waiting all this time and not getting the home at all. For this reason, some buyers move on to a sellable property prior to obtaining an answer from the bank.
In summary, there are many reasons why buyers (and some realtors) simply stay away from short-sales altogether. It is a long and cumbersome process that is uncertain to yield the hoped for result. So if you are thinking of buying or selling a short-sale, make sure to have the right professionals doing the job for you. Ask for a list of their recent short-sale successes and failures ” and ask for referrals.
To view all San Diego homes for sale, visit Adam’s website. You will also get up to date stats and market data, as well as local and school links.
