An article in aol.com points out that whenever home buyers hear the word short sale, they take it to mean a property will be a good deal and is being sold by a distressed seller, particularly in areas where prices have already begun to rise quite substantially. In fact the reality can be quite different, and quite a few real estate agents have found short sales take a long time to complete.
One of the problems with a short sale is that the sellers’ bank has to approve the sale before they can close. This can often mean mountains of paperwork are required to evaluate the short sale, and for the bank to verify that the sale is necessary. As a short sale means the home is being sold for less than the outstanding mortgage, it’s hardly surprising that banks want to make sure the seller cannot afford to pay the difference and is truly unable to stay in the property.
These factors mean that the bank will be looking very closely at the seller’s finances as well as the buyers, just to make sure it’s not giving away money unnecessarily. This process isn’t quick, and can take far longer than buying from a motivated seller. The sheer number of documents and signatures required to complete a short sale can mean paperwork becomes lost. If just one page or signature is missing then the whole process is held up until the file is complete. Often banks will not allocate the same level of resources to short sales as they would for other bank procedures that are considered to be more profitable, and as a result the process can be lengthy and time-consuming.
It can become even worse if the short sale involves two different loans. This can often mean the major loan is being settled as a short sale, while the second line may be smaller such as a line of credit, and can be completely wiped out. If these loans are from two different banks then the process can get particularly complex as each bank will probably have its own system and is unlikely to communicate with the other bank.
Sellers looking to achieve a short sale are best advised to look for an agent who has experience with this process as they will be more able to push the sale through. If you are a buyer and are looking to purchase a short sale home, then find out if the agent is experienced with short sales, as this will at least tell you whether or not to expect a long drawn out process.