I was at a closing this morning and one of the real estate agents asked the attorney representing the other side in the closing whether or not she did many short sales. The attorney responded that she did not. She actually said that she avoided short sales because they are so difficult.
Short sales are complex. Short sales can be difficult to close. Frankly, however, most real estate transactions these days are difficult. Buyers are driving hard bargains, sellers want to get a good deal and want to get out while they can but do not want to give up the farm, and lenders seem to be changing the rules on a daily basis.
So, why are short sales hard? There are a number of factors. First, they take a long time. A short sale seller needs a buyer who does not have an immediate need to take possession. Some banks provide a quick short sale decision, others can take a long time. Second, many real estate professionals are not familiar with short sales. A lack of familiarity can lead to missteps that waste time or make a transaction less likely to be approved. Next, short sales are sometimes not the “right” deal. Usually a seller is not in a position to contribute funds to make repairs and many banks (although not all banks) will not provide credits to a Buyer for repairs or closing costs. Finally, the short sale lender sets the timetable. I have had many transactions where the parties waited months for an approval only to receive the approval along with a demand that the transaction close in 7 or 10 days. Many buyers will struggle to be in a position to close upon such short notice. Continue reading →
Although the Illinois Department of Financial and Professional Regulation has not chimed in on the issue of short sale fraud just yet, the governing bodies regulating real estate agents and real estate transactions of many states have. The California Department of Real Estate has been at the forefront of exposing and combating short sale fraud schemes.
