Here is good information for our buyers on what happens during a "short sale" purchase and why we recommend foreclosures or bank-owned properties!
Q: I went under contract to buy a house on six months ago. This is a short sale, and I understand that multiple lenders are involved. But I have been more than patient. What can I do? I can’t seem to get anyone to listen to me. Don’t the banks want this to work out?
A: I’m sure that someone besides you wants this sale to work out – the seller! The problem is that each lender has to agree to the short sale and lenders are drowning with the numbers of short sales, foreclosures, and loan modifications that are stacked up.
For a short sale, the lender will require quite a bit of documentation from the seller to determine whether the short sale is legitimate and whether the seller has the ability to make up any deficiency. The lender also would want to determine if it would get more money if the seller simply defaulted on the purchase and the lender foreclosed on the property and sold it off.
While these are some of the considerations a bank may have, the underlying problem with lenders and short sales is time.
Banks have too few people on staff to handle the load of short sales and other requests being made since the start of the housing and credit crisis. The bank takes in the requests and then must evaluate each request to figure out how much of a hit the investors will take on the loan in a short sale. The lender also tries to figure out who else is losing money on the deal, like other lenders.
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I just had a short sale approved with a negative ,141,000 to the bank.
You would think the seller would be ECSTATIC???? Well, we wiped the first loan, and the second would be a short sale...
After hearing how important it was to get their home sold and not let the house go into foreclosure, after hearing the wife of the homeowner in tears asking why it takes so long...
......they dont want to move...
Thanks for reposting this content!
Hey, Susan - Although Ilyce is in Illinois, I understand that California is a no-deficiency state, so the banks here don't need to determine if the Seller can pay any deficiency. I think that's part of the problem with us in California because once the bank approves a short sale here in California, the deficiency money is gone! Gone, gone, gone.