Short Sales – Part I

Short Sales are where lenders allow the sellers to sell the home for less than they owe on their mortgage balance without a foreclosure apparing on their credit report. Many buyers and sellers are finding out that “Short Sales” are anything but short when it comes in the amount of time needed to close on this real estate/mortgage transaction.

In fact the most recent polls of realtors nationwide conducted by LinkedIn Real Estate show the following times to close on  Short Sales:

1. Only 9% close in less than forty-five day from start to finish or accepted offer to closing at the title company.

2. Only 18% of short sales close between 45-90 days or almost two to three times the amount of time to close on a normal mortgage transaction.

3. Only 30% of them close between 90-120 days or nearly four months to close on a home.

4. Finally ana amazing 42% don’t close for more than 120 days.

Basically the vast majority or 72% of short sales are taking 90 + days to close in political terms that is a super-majority of short sales take months and months to close at the title company. Why do you ask does it take so long to close a short sale transaction? Well there are a vast plethora of reasons why short sales take so much longer than the “traditional” purchase of a home that is not a short sale.

First, there is just a huge pool of short sales available in the marketplace due to the mortgage fiasco of the previous decade that has led to an almost thirty-percent decline in home values nationwide on averaage. Banks in the past have had very small departments to handle short sales as they were not very prevelant. Banks see this short sale “crisis” as a shorter-term problem and are not willing to spend the capital to create a huge department that they will not need longterm. Thus, there is just a huge backlog of short sales for banks to process with limited resources allocated for it.

Since there is a lot of material to cover on short sales and why they take so long we’ll make this a multi-part post ext time post we’ll look at the other

 

This entry was posted in Mortgages, News, Real Estate and tagged , . Bookmark the permalink.

Leave a Reply