Who the Heck Named Them Short Sales? Shouldn’t They be “Long Flippin’ Sales?”
Is there an “average” length of time between when a contract is written and escrow is closed for a short sale property. Unfortunately, NO! There is no average time.
In Fountain Hills, Short Sales can take from 90 days to over a year if there is no pre-approval from the lender to “sell short.” But, it’s also possible that your short sale transaction may not close. Read on to see some of the quirks of these sales that you will want to watch out for.
The short sale aspect of our industry is evolving each week. Each lender is trying to develop the best systems to handle requests for short sale. Can you just imagine how dysfunctional this evolutionary process is? As advances are made, new policies and procedures are implemented…and this happens in thousands of banks and institutions across the industry….yikes!
Unfortunately, there are many variations of distress from one seller to the next, providing hundreds of potential issues for lenders and their overworked staffs to figure out. Some of these variations include:
- How many loans are on the property? If more than one, it gets tricky and has a higher rate of failure.
- Who is the lender handling the mortgage (s). Some are notorious for being slow and uncoopertive. Some are a pleasure!
- Was there mortgage insurance that will mitigate the lenders loss? Believe it or not, this will hugely complicate the situation, as there is less urgency on the part of the lender to allow the short sale.
- Was the loan held by the institution or were they simply servicing the loan for someone else.
- Who is the person ultimately responsonsible for making the decision to accept the short pay amount? Is it the bank or is it a private investor.
- Most importantly…has a notice of default been filed against the property, and is a foreclosure already scheduled. Depending on how much time you have before that unfortunate event–and whether the lender is willing to extend or not–you may not have time to accomplish all the elements of the transaction.
The rate of difficulty of a short sale transaction is directly related to the answer to each of these questions…and these will affect the length of time.
Just a caveat…in some instances of Fountain Hills and Scottsdale Short Sales, we’ve seen lending institution require 1) a higher purchase price and 2) the Seller to contribute. If the parties to the transaction aren’t prepared to proactively address those two issues, you may wait months and then crash and burn in an unsatisfactory conclusion.
Make sure to work with experienced brokers on each end of the sale and that there is much communication going on. If that isn’t the case, you can expect a long haul, and possibly a disappointing conclusion. Short sales are not for buyers who have a defined time limit to move into their new home.
Now, this is not to say you shouldn’t consider purchasing a short sale, or that if you have a hardship, that you shouldn’t consider that short sale is an option for you. For Buyers, Short Sales often provide a great value (they normally will sell for an average 85-90% of market value) and it’s nice to work with a seller who has some knowledge of the home. For Sellers, a short sale can provide less damage to your credit than a foreclosure, but be sure to consult with an attorney about your options and opportunities. Then, use an experienced Realtor that can work in conjunction with all parties…the lenders, your attorney, a good escrow company and the Buyer’s Agent.
At Sonoran Lifestyle Real Estate, each of our Fountain Hills and Scottsdale associates has achieved the SFR (Short Sales and Foreclosure Resource) certification from the National Association of Realtors. We have handled scores of transactions in both short sales (for both buyers and sellers) as well as bank owned purchases and sales. We know that managing these sales is the only way we are going to create the shift we need in the marketplace. We look forward to the day when the market recovers and foreclosures and short sales are mostly in our past as a nation.