Short Sales and Lenders
Although lenders say they want to sell properties and don’t want to become property owners, it seems they could streamline the entire short sale process.
It is well known that the entire short sale process can be extremely frustrating and time consuming. I speak from experience. I have had four buyers who made full price offers on properties which were classified as short sales. In every instance, the buyers pulled the contract and walked away because the time element involved in trying to purchase a short sale property was 30-60-or 90 days before the lender could give the potential buyer an answer and close the transaction.
In each instance, the buyer found a resale property to purchase. In a resale transaction, the seller can provide an answer to an offer to purchase within usually a 24 hour time frame. That can be acceptance, a counter offer, or simply a refusal to answer if the offer is not satisfactory to the seller. But any good Realtor knows and tries to instruct their seller to always counter offer.
Part of the problem with lenders is that they work a normal workweek, unlike Realtors who work on commission and therefore are more sensitive to time elements. It is true that often there is a first and a second mortgage on a property and in order to have a successful short sale, both lien holders have to agree to the terms and conditions of the contract, as well as the investors.
But it seems to me that lenders could streamline the process and sell more properties if they do some preparation when a homeowner wants to do a short sale. If there were a method by which appraisals could be done prior to listing the property for sale, and the lender indicated to the Realtor or homeowner that any price x amount or more will be accepted, then the long delays would cease.
A buyer would make an offer, hypothetically within the guidelines. The paperwork would be completed for the appraisal and that offer would be immmediately accepted by the lender, second lien holder, and investors. Certainly this requires more up front work prior to listing the home, but once the offer is made, the transaction can proceed smoothly. Buyers would not walk away in frurstration.
Lenders would be able to sell more homes and get the losses off the books. For every month the lender is not receiving a mortgage payment, costs accrue including taxes and insurance. Often people who know they are going to loose their home stop taking care of the home and defer maintenance. Once the lender owns the property, addiitonal costs accrue including this deferred maintenance.
There is no question there are many entitites involved in a short sale. With foresight, it appears the transaction could progress far more smoothly to the benefit of all parties, if the homework were done upfront.
Tags: Foreclosures, Short Sales