Why Do Short Sales Take So Long?

Here’s one of our favorite Monday Top 1o posts to start your week off; feel free to visit our others here. Additionally, I have a complete category on this site devoted to Costa Mesa short sales. Now, why short sales take so long is probably not the question that keeps you up at night, but I constantly wonder why Costa Mesa short sales have to take so long. Curious for an insider’s perspective? I have represented about a dozen short sales, both buyers and sellers, and I can tell you from my perspective this is what usually happens to make the Costa Mesa short sale longer:

 

1. Impatient Buyers – Ever wonder why some short sales sit on the market for more than a year? Often times it is because the buyer simply don’t have the patience to wait for the bank’s response. Think it will only take 45 days to complete a short sale? Don’t hold your breath. If you can’t wait out a several month period, you should look at different kinds of properties that are not in distress.

 

2. Sellers Paperwork- While Buyers tend to create more issues for the duration of a short sale, sellers can certainly hinder the process too. Not getting updated paperwork or the correct paperwork in front of the bank so they can make a decision costs time as well. When the banks are looking at thousands and thousands of short sale files, it helps to be complete and get the right info to them the first time. It’s even more important so that a seller can have their loan completely forgiven this year.

 

3. Unresponsive Negotiator - Often times a negotiator working for the bank will have hundreds of files on his/her desk. I have had cases where it can take a month to get a response! Some won’t even take phone calls, only opting to use e-mail.

 

4. Unresponsive Listing Agent – If I had a nickel for every unreturned phone call or voicemail to a realtor on a short sale, I wouldn’t have to write this blog:). People, pick up the phone! Don’t you want to help your client and sell the house too?!?

 

5. Low Ball Buyers- Another man’s pain is another man’s fortune? Perhaps, but thinking that the bank will take an offer $100,000 under market is just ridiculous. Trust me, the bank knows the comps a lot better than you do. Bad loans that adjust can break your bank.

 

6. Impossible to See Home- “Home can only be shown on Tuesday nights between 7:15 and 7:30”. That is a direct quote from a listing’s showing instructions, no joke. Can you wonder why this house has been on the market over a year?

 

7. “Active” Status on a Listing -This is the most ANNOYING thing that Realtors do. They leave the status as active/for sale when in actuality they have multiple offers in front of the bank, so you have no idea as a buyer what the real deal is or more importantly when a buyer drops out. If agents would only accept one offer at a time we could all get the seller’s house sold a lot more efficiently.

 

8. Back Taxes/HOA Fees/Liens – I get it. You are going to do a Costa Mesa short sale and you stop paying the mortgage and everything else that goes with it. Well guess what? About 8 months down the road when the first two buyers walk, guess who doesn’t want to pay your $8,000 HOA bill? Right, not many buyers are in the mood to pay market price for the house and all the other fees that you have not been paying.

 

9. Negotiation Fees - This one has become more common in the last year or so. Negotiators are hired on behalf of the seller to negotiate the sale, but in doing so they need to charge the buyer (or other agents) a negotiation fee. These fees can be really steep and only add to a buyer’s displeasure at having to pay a ton of extra money to buy a Costa Mesa short sale.

 

10. Banks Unwillingness to Cooperate – Well, this can really be the big one, without any question. Why won’t the bank cooperate? The one thing I tell my clients is that you have to know how much is out in loans on the home and how many loans there are. Will the bank need to write down More than 20% to make.

 

11. It’s Not Really On The Market – Plenty of these homes that you see at rediculous offer prices are people who put the home on the market and offer it as a short sale, but when you call the agent they say “Oh, they are just trying to do a loan modification, they aren’t really interested in selling it”. Oh…sorry I called(!). It appears that they were actually trying to sell it because you took the time to load 20 pictures on the MLS. My bad, I should have known:) This is more than annoying to a realtor, but how misleading is that to the public?

 

OK, I’m off my soapbox, and I had to give you a bonus to the top 10 list with the extra one, but just know that when you see these homes on the market for so long, there are lots of reasons for it. A good short sale can be completed from cradle to grave in less than three months with the right agent involved.

 

Need Help navigating a short sale? Call Colin Delaney at (714) 743-9882 for free advice or help, or e-mail me at [email protected] for a confidential talk.