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August 2nd, 2011 5:36 PM by David W. Welch
The first thing I tell any buyer that is submitting an offer on a short sale is that very few of them actually get closed. Here in Orlando I have been tracking the closing ratio on short sales for more than two years, and despite what people may think that ratio has been consistently in the 8%-10% range. I look at the number of closed short sales each month compare to the number of pending short sales each month to calculate this ratio. The number of closed short sales has risen, but only in proportion to the number of pending short sales. I do have to agree with other agents that the banks seem to be improving their short sale processes. Unfortunately, while the process and the communication has improved the results really are no different.
The short sale process is just too long. The house that you fell in love with, and wrote an offer on starts to look less appealing after about 30 days. The average short sale process is probably in the range of four to six months. At the end of that process the bank can say no. This is one outcome I believe most buyers are prepared for, but does not happen that often. The more likely outcome is that the bank approves the deal, but wants more money from someone. They may look to the seller to bring cash to closing, and the seller may be unable or unwilling to do so. This can end the deal, unless the buyer is willing to bring the extra cash.
The two most common situations that seem to bring the transactions to a halt are the contract expiring prior to short sale approval and the buyer walking away; and the sale is approved, but the seller rejects the banks offer. I recently had a transaction where the bank wanted the seller's to bring cash to close and the lender was still going to pursue a deficiency judgment against them. My buyers wanted the house so badly, they were willing to bring the cash ($10,000) to closing. The sellers however, were unwilling to accept the deficiency, and rejected the bank's offer. Now, five months into the transaction, we are starting over. I just try to advise any short sale buyers that it is not a simple yes or no from the seller's bank.
David Welch Real Estate Optimist, Orlando Real Estate, Any Home-Any Phone