The Downside of Short-Sales

Many people think “short-sales” work like a traditional real estate transaction.  Unfortunately there are several downsides to pursuing such an offer.

Les Christie of CNN Money wrote an interesting article about some of the pitfalls of dealing with short-sales. Here’s an excerpt from that article:

 

Lenders say they want to help troubled homeowners, but they are delaying deals that could save everyone. Lenders are taking much longer than necessary to approve short sales, according to Duane LeGate, of House Buyers Network, a short sale specialist. In a short sale, a homeowner who cannot keep up with their loan asks the lender to take a dollar amount less than what is owed on a home’s mortgage, and forgive the remainder of the unpaid debt. Coldwell Banker CEO Jim Gillespie agrees that short sales are taking too long to complete. And he speaks from firsthand experience; a short-sale offer he made on a house in Marin County, Calif. in late fall didn’t win approval until April. But most buyers can’t, or won’t, wait that long.”That’s been our biggest challenge - keeping the buyers interested long enough as we wait and wait for an answer,” said Jeff Morrell, a Colorado Springs real estate agent who specializes in short sales.

Other pitfalls include the pricing. Most short sales are priced before the bank actually agrees to take less that what remains on the loan. Many are listed as “subject to bank approval” and the bank may very well reject your offer after waiting months for a response.   We certainly experience the same problems when dealing with short-sales here in Turlock, and across the Central Valley.