As a Davis,Ca realtor who deals with Short Sales and have sold many during the last 15 years, I have experienced euphoric highs of successfully completing the Short Sale and a few cases where the bank decided to foreclose. About 30% of the homeowners nationwide that apply for a Short Sale are approved. This percentage is slowly increasing with some pressure from the federal government and many banks now allocating some of the grunt work to outside entities like Equator.
Over the years I have had a few Short Sales in Davis,Ca and the surrounding communities close escrow in as little as 60 days but the majority can take six months or longer. My job as a Short Sale Specialist is the same with any home I market… get it SOLD. That means finding a buyer that will pay fair market value and willing to wait the time it takes for bank approval.
Part of getting a Short Sale to the closing stage is knowing the proper nuances and protocol. Unfortunately, there are many realtors getting involved with Short Sales that are clueless and are putting the seller at a financial risk for their own monetary gain. Here are a few mistakes that I see repeated by some realtors that could prevent the Short Sale from being approved 1) Submitting unsigned offers to the lender 2) Submitting low-ball offers to the lender that has no chance of being accepted 3) Allowing contingencies after the Short Sale approval 4) Not submitting required documentation in a timely fashion.
There are a few realtors that understand the Short Sale puzzle and know how to successfully navigate the waters. Short Sales that have more than one lien holder tend to be more difficult to get done than if there are only one lender involved. When there are multiple lenders, you need approval from both for the sale to take place. There are occasions where the 2nd lien holder has chosen to foreclose instead of granting Short Sale approval.
Here’s the scenario… a home is on the market for $350,000 and has a second for $50,000. The seller is financially unable to keep his mortgage current. A buyer makes an offer at $340,000, which has been determined fair market value. The seller accepts this proposal and the offer is then sent to both lien holders. The first lien holder accepts this offer and the second lien holder is offered a payoff of $3,000, in order to approve the Short Sale. There are cases where the second will refuse this payoff and the home forecloses. Even though it appears the second will not benefit monetarily, it is still conceivable they could foreclose. The agent should build a relationship with both lien holders at the beginning of the process in hopes of curtailing this possibility.
The above scenario is why it’s imperative you have a Short Sale Specialist that has been challenged and succeeded with the rigors of Short Sales. There are times when it is too late or virtually impossible to make the Short Sale work but having an expert negotiator on your side improves the odds. Please contact me with any direct inquiries or visit my web site at www.JohnnyBrooksHomes.com for helpful tips on buying or selling a home and to view all local area homes for sale.