The Short Sale Roller Coaster

You can open up any newspaper or visit any website to read about the aspects, theories and justifications behind short sales. The one thing that most don’t discuss however is the mental endurance that it requires from a buyer. Most people when looking for a house come across short sales that may appear to be just like any other sale. Even after warnings from their Realtors regarding the long timelines, uncertain final sales prices and high fall out ratios, many buyers still choose to take the leap.

It’s only natural for potential home buyers to want a good deal as does everyone else. The problem arises when their expectations and emotions do not have the same endurance. Even putting in an offer on a standard sale makes the wait time seem long. Many buyers have told me that the 2 or 3 days they waited for the seller to counter or accept their offer was the longest 2 or 3 days of their lives. I have been there and completely agree. It feels like forever when you have your family’s new potential home almost in your grasp.

Now imagine a short sale, you not only have that initial period of waiting for the sellers to choose your offer over others, you then need to sit idle with no control over the next 4-6 months while the file is reviewed by the servicers of the loans and their actual investors who control the eventual decision. Imagine what can happen in 4-6 months. You may be forced to sign a new lease if you rent, or make a higher rental payment by choosing month to month. Interest rates may go up and make your approved loan now out of your price range. I have had many buyers experience credit hiccups in this time period that were seemingly no big deal but affected their credit enough to kick them out of a loan approval.

Without getting to technical into the process of how short sales work, I will just tell you that the process hardly ever goes as planned. The bank is almost always starting to counter a higher price, closer to the fair market value of the home. I warn of this because most agents tend to list their short sales lower and most buyers also tend to offer lower on short sales, but the lenders…well, they will want the fair market value for the home anyway. Any property repairs, back HOA fees, home warranty, termite work or closing cost assistance is also going to be negotiated by the lender. This may put the buyer in a predicament, especially if their financing is dependent on any of those concessions.

I have used the time 4-6 months to give a reasonable time line for a short sale. Please consider that I have seen many take over a year with no resolve. Think about that, going to bed every night for a whole year wondering if tomorrow will be the day that you find out if your family gets it home, or finds out that it has lost the purchase due to some long overdue decision by an investor sitting at a desk 3,000 miles away. Even if the outcome is in your favor and you end up buying the home, I guarantee that those days will feel like weeks and the weeks like months as you wait in anxious anticipation.

I am not advocating not buying a short sale, I just feel it is mine and every other Realtors duty to set up buyers for success and realistic expectations is a huge part of that.

That’s my Real Estate sense. Follow me on facebook!