Frustrated With The Short Sale Process?

By Joel Persinger
YourRealEstateDude.com

A large percentage of the homes currently sold in San Diego County are either pre-foreclosures (also called “Short Sales”) or foreclosures (also know as REOs). That being the case, the average buyer will run into a ton of these properties and likely make offers on many. While the REOs can be frustrating because the banks that own them are difficult to deal with, the short sales can be challenging because of the length of time it takes to negotiate them to a successful conclusion.

When a property is being sold for less than what is owed to the lender, the term that is used to describe it is, “short sale.” Short sales require that the lenders agree to take a loss on the sale of the properties. Consequently, homeowners do not have much control over whether their properties actually sell. The control is in the hands of the short sale lenders. Some lenders are easier to deal with than others. But, it is fair to say that all lenders hope to mitigate their losses by selling the properties for as much as possible.

Buyers approach short sales because they want to get a deal and lenders sell properties short because they want to get as much money out of the house as possible. They know that if they foreclose, they will receive far less. The parties often do not agree. So, the negotiations go on and on until the two parties come to some agreement that meets both of their goals. This process can take months and many buyers simply do not want to wait.

I checked with one of our clients the other day to see how her search for a new home was going. She is working with one of my agents in North County. When I spoke with her my first question was, “How is my agent treating you.” She said, “We’re doing great. I’m just frustrated with the short sale process.” A few questions later and I discovered that she was mostly frustrated by the length of time it takes to get a short sale transaction to close escrow. Still, she is hanging in there because it is very likely that she will get a terrific deal on the house.

If you are thinking about buying a short sale property, you must be prepared for the fact that the process is confusing, lengthy and challenging. You should also prepare yourself for the reality that you may work on a short sale purchase for months only to have it fall apart and never get the house. I have one client currently who has been attempting to buy the same house for about a year. It should be noted that in that particular case the house and lot are one of a kind! Still, long negotiations and long escrows are the norm for short sales. You need to know that before you get involved in one.

On a positive note, some of the best deals you will find are short sales. This is because many buyers don’t try to buy them because they’re difficult. That leaves you to take advantage of the situation by being one of the few buyers who will hold out long enough to succeed. As my grandfather used to say, if you want to be successful, find out what everyone else is doing and then do the opposite.