Home > Uncategorized > Why do banks delay processing Short Sales?

Why do banks delay processing Short Sales?

One year ago, the average time for a Short Sale approval by a lender was 50 to 75 days.  Today, despite the fact that banks have had plenty of time to fine-tune their procedures, many approvals are taking 3 to 6 months or even longer.

How does the slower reaction time affect the banks?

For lenders it means that the value of the property almost certainly will be reduced.  Because many buyers become impatient and “walk” from the deal, often the property will wind up in a foreclosure sale at a price significantly below the amount originally offered in the Short Sale.  In addition to the lower sale price, expenses such as legal fees, taxes, insurance, utilities, maintenance, association dues etc. eat up many additional dollars.  Because foreclosure actions often take 1-2 years to complete, the lost interest charges on the value of the money invested will add even more costs to the lender.  Additionally, many properties in the foreclosure process are stripped of their appliances and other items thus contributing to a further decrease in value.  As a rule, a lender who forecloses will be lucky to net 50% of the amount it would have received in a Short Sale offer.

What’s the best way to shorten the time?  The secret is to use an experienced Short Sale facilitator who knows the shortcuts and has processed hundreds of deals.  This person understands the process, has previously dealt with the company and/or the negotiator and can often cut through the red tape to get the deal approved quicker.

If you can provide me with a valid reason for a lender not to accept a reasonable Short Sale offer, please let me know.  I’m dumbfounded!!!

I am Licensed in the State of Florida as a Real Estate Broker, Mortgage Broker and Title Insurance Agent and am considered by many as “The Real Estate Quarterback”. You can reach me via email at:  rick@rickhschuster.com or you may Tweet me at: @rickschuster.  If you’d like to reach out to me by phone, please call anytime at:  561-893-0077.

If you like what you read here and would like me and my team to package and handle all the paperwork and communications with the lender in order to facilitate a short sale request with you or a client’s lender, at no out of pocket expense, please contact me and I’ll be happy to review our procedures with you.

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