Short sales add a new degree of complexity to real estate transactions, in the sense that they introduce so many new and varying variables that no two short sales are alike. Complicating things even more is the fact that so many of these variables are so completely outside the control of the Seller, Buyer, and the Realtors involved.
However, it is possibly to do some general qualifying of short sales. Certain aspects make some short sales “easier” than others.
One attribute that many pay special attention to is the number of lenders that have a lien on the home for sale. The more lenders there are, the more complicated the short sale can get because each lender needs to approve the short sale. Both lenders want to get as much money out of the short sale, which can lead to disagreements between these lenders, resulting in the rejection of the short sale. So obviously, short sales where only one lender is involved generally simplifies things.
There are also certain lenders who are typically known in the industry to be more difficult to work with. It’s not that they aren’t open to a short sale, just that they are so overloaded with short sale files that need to be reviewed. A few years ago, it may take 2-4 days for these larger short sale lender to receive and acknowledge the short sale package that was sent to them. These days, many lenders are taking 2 weeks to acknowledge receipt – or even worse – non-receipt! This adds a lot of unnecessary, nonsense time to the entire short sale approval process.
When reviewing the short sale lenders, typically the smaller banks will be responsive in a more timely manner. Credit unions and local banks usually have a much smaller foreclosure file load, and can review them faster. Also because of their smaller size, it is easier to get in touch with a real, live person to get you the answers and updates you need – quickly!
Recently, more banks have begun adopting “fast track” short sale programs. These lenders have put into place systems whose sole purpose is to review short sales and make decisions quickly on the approval of that short sale. These typically have regional managers with some level of decision-making authority. If these fast track programs work, we can expect more and more banks to adopt them. Hopefully, they’ll do it fast enough!
Read the next article in this series, Short Sales 101 – Part 4: Buyers, Do Not Be Afraid.