Why short sales homes and pre-foreclosures take longer to buy

The question of the day!

There are several reasons short sale homes may take longer to purchase than a REO or Bank Owned property.  The REO and foreclosure property has already been through the all the stages and they are ready to be sold when they enter the market. The Short Sale home on the other hand just starts it's first satges when an offer is recieved.

With a short sale home we have more parties to bring to an agreement. Since the seller still owns the home, they are the first to review any offers that come in. Once an offer is approved by the seller and pucrchaser we then have to put together a very complete package of information to send to the sellers bank for approval.

Many times the package alone can take 24-48 hours to be ready to submit. Once that information is submitted and as long as nothing has been missed, the sellers bank will take another 48 hrs to upload it into their systems and be ready to communicate with the agents. With that said-there goes week one. And we find time and again that we run into loss mitigation departments where we have to fax the information 2-3 times before they acknowledge reciept.

Once the short sale information is recieved by the owners bank, the file is passed through many phases prior to offer approval. Some companies manage to get these files through the stages within weeks and others take over 60 days. One of the stages toward approval is a BPO and Appraisal order on the home. I have found that once we hit this point, we are usually getting closer to an approval on the purchasers offer or a counter offer.

Many weeks and/or months can pass while the banks moves the file toward approval and or a counter offer. Some of the banks we have worked with are improving the time frames while other lag behind.
Great article on this in the Washington Post talking about how some of the banks have also laged behind on their Loan Modifications for home owners

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/04/AR2009080401134.html

Short Sales are well worth the effort to buy and wait for. They are also a benefit to the seller in default who is saved from havng a foreclosure on their credit!  

Short Sales- Are they worth the wait?

HE LOOKS FRUSTRATED DOESN'T HE?


As more short sales enter the market, buyers should prepare ahead of time for a long process! On the bright side, the short sale properties we have closed on recently have been a great buy for our clients and also a relief to the seller!

Home buyers need to plan in advance to be patient if they choose to go through this type of purchase. I have noticed time and again, as we start the process the purchaser is really excited about the great deal they are getting on the home but sometimes we lose that excitement when the offer on this type of property takes a long time to approve and sometimes a long time to close. Very understandable! Just try to remember that anything you invest in, that is truly worth the time and trouble, is not always easy!

Some of the most recent issues we have noticed that you may want to prepare for are.

1. Both seller and bank approve your offer but right before close, the MI or PMI company wants to approve the amount or have the seller sign a promisary note as well. This can cause delays.

2. The bank has approved your sale and liens are attached at the last minute. This can be resolved, expect delays.

3. Too much time has passed and your interest rate lock has expired-prepare for this ahead of time with your lender.

These are only a few of the many problems that can arise in this type of purchase. I highly recomend my clients use an attorney along with a Certified Distressed Property Expert (CDPE) to navigate through this type of sale. Don't plan on a closing date or order your moving truck until you have officialy closed on the short sale home. Be prepared for possible last minute issues.

In the end-are they worth the wait, the time, and the effort? Absolutely, if you are looking to save thousands! Just keep your eye on the final goal and you can achieve great results!